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Valspar Corp (NYSE:VAL)
Beneish M-Score
-2.25 (As of Today)

The zones of discrimination for M-Score is as such:

An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.

Valspar Corp has a M-score of -2.25 suggests that the company is not a manipulator.

VAL' s 10-Year Beneish M-Score Range
Min: -2.9   Max: -1.94
Current: -2.25

-2.9
-1.94

During the past 13 years, the highest Beneish M-Score of Valspar Corp was -1.94. The lowest was -2.90. And the median was -2.51.


Definition

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.

The M-Score Variables:

The M-score of Valspar Corp for today is based on a combination of the following eight different indices:

M=-4.84+0.92 * DSRI+0.528 * GMI+0.404 * AQI+0.892 * SGI+0.115 * DEPI
=-4.84+0.92 * 0.9891+0.528 * 0.9604+0.404 * 1.0285+0.892 * 1.0178+0.115 * 1.3155
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.999+4.679 * 0.0499-0.327 * 1.1055
=-2.25

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jul15) TTM:Last Year (Jul14) TTM:
Accounts Receivable was $877 Mil.
Revenue was 1149.126 + 1079.289 + 1014.669 + 1233.065 = $4,476 Mil.
Gross Profit was 411.283 + 393.203 + 333.292 + 422.543 = $1,560 Mil.
Total Current Assets was $1,865 Mil.
Total Assets was $4,578 Mil.
Property, Plant and Equipment(Net PPE) was $631 Mil.
Depreciation, Depletion and Amortization(DDA) was $72 Mil.
Selling, General & Admin. Expense(SGA) was $824 Mil.
Total Current Liabilities was $1,621 Mil.
Long-Term Debt was $1,707 Mil.
Net Income was 102.862 + 90.314 + 103.974 + 108.056 = $405 Mil.
Non Operating Income was -0.07 + -1.694 + 0.965 + -0.196 = $-1 Mil.
Cash Flow from Operations was 0 + 5.635 + -23.322 + 195.646 = $178 Mil.
Accounts Receivable was $871 Mil.
Revenue was 1203.062 + 1130.178 + 956.119 + 1108.302 = $4,398 Mil.
Gross Profit was 416.692 + 380.758 + 319.053 + 355.793 = $1,472 Mil.
Total Current Assets was $1,688 Mil.
Total Assets was $4,180 Mil.
Property, Plant and Equipment(Net PPE) was $643 Mil.
Depreciation, Depletion and Amortization(DDA) was $100 Mil.
Selling, General & Admin. Expense(SGA) was $811 Mil.
Total Current Liabilities was $1,670 Mil.
Long-Term Debt was $1,078 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(876.8 / 4476.149) / (870.954 / 4397.661)
=0.19588267 / 0.19804937
=0.9891

2. GMI = Gross Margin Index

Measured as the ratio of gross margin in year t-1 to gross margin in year t.

Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(393.203 / 4397.661) / (411.283 / 4476.149)
=0.3347907 / 0.34858558
=0.9604

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (1865.045 + 630.814) / 4578.018) / (1 - (1688.35 + 643.069) / 4179.798)
=0.45481669 / 0.4422173
=1.0285

4. SGI = Sales Growth Index

Ratio of sales in year t to sales in year t-1.

Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=4476.149 / 4397.661
=1.0178

5. DEPI = Depreciation Index

Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.

DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.

DEPI=(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1)) / (Depreciation_t / (Depreciaton_t + PPE_t))
=(100.383 / (100.383 + 643.069)) / (72.15 / (72.15 + 630.814))
=0.13502284 / 0.10263683
=1.3155

6. SGAI = Sales, General and Administrative expenses Index

The ratio of SGA expenses in year t relative to year t-1.

SGA expenses index > 1 means that the company is becoming less efficient in generate sales.

SGAI=(SGA_t / Sales_t) / (SGA_t-1 /Sales_t-1)
=(824.371 / 4476.149) / (810.761 / 4397.661)
=0.1841697 / 0.18436187
=0.999

7. LVGI = Leverage Index

The ratio of total debt to total assets in year t relative to yeat t-1.

An LVGI > 1 indicates an increase$sgai= in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((1706.95 + 1620.873) / 4578.018) / ((1077.921 + 1670.424) / 4179.798)
=0.72691348 / 0.65753058
=1.1055

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(405.206 - -0.995 - 177.959) / 4578.018
=0.0499

An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.

Valspar Corp has a M-score of -2.25 suggests that the company will not be a manipulator.


Related Terms

Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Valspar Corp Annual Data

Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14
DSRI 1.01020.93761.03630.98051.10891.08240.86341.00711.10970.9887
GMI 1.05240.95161.01711.06560.82551.02381.06580.92561.01740.9724
AQI 0.98961.0481.00031.01930.99960.92510.8920.9651.00350.9978
SGI 1.1121.09731.09111.07170.82671.12081.22511.01721.02061.102
DEPI 0.89821.05971.06170.86470.94711.19380.82811.0411.18980.9032
SGAI 0.98461.0811.01530.95551.22940.90181.02380.99310.94541.0377
LVGI 1.01230.99541.00270.96050.96661.04721.17261.01461.11241.052
TATA -0.0294-0.0331-0.0088-0.0303-0.0499-0.011-0.0053-0.0162-0.02620.0002
M-score -2.50-2.62-2.39-2.53-2.89-2.34-2.52-2.59-2.48-2.45

Valspar Corp Quarterly Data

Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15Apr15Jul15
DSRI 0.96980.96571.10971.09661.12151.11180.98871.01960.91270.9891
GMI 0.96980.99591.01741.02231.00320.99810.97240.97450.96250.9604
AQI 0.9940.96221.00351.00021.00881.02880.99780.97760.99541.0285
SGI 0.99330.9941.02061.04341.06851.0941.1021.09471.05751.0178
DEPI 1.10741.11791.18981.07111.04181.00390.90320.97681.00051.3155
SGAI 0.95710.93350.94540.95370.99631.0341.03771.02351.0240.999
LVGI 1.03531.07371.11241.11721.09591.06521.0521.06091.05951.1055
TATA -0.0203-0.024-0.0262-0.0288-0.0165-0.00840.00020.02060.01580.0499
M-score -2.62-2.65-2.48-2.50-2.40-2.35-2.45-2.33-2.48-2.25
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