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Valspar Corp (NYSE:VAL)
Beneish M-Score
-2.19 (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 -2.19 signals that the company is a manipulator.

VAL' s 10-Year Beneish M-Score Range
Min: -2.89   Max: -2.19
Current: -2.19

-2.89
-2.19

During the past 13 years, the highest Beneish M-Score of Valspar Corp was -2.19. The lowest was -2.89. And the median was -2.49.


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 * 0.9887+0.528 * 0.9724+0.404 * 0.9978+0.892 * 1.102+0.115 * 1.1835
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0377+4.679 * 0.0487-0.327 * 1.052
=-2.19

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

This Year (Oct14) TTM:Last Year (Oct13) TTM:
Accounts Receivable was $840 Mil.
Revenue was 1233.065 + 1203.062 + 1130.178 + 956.119 = $4,522 Mil.
Gross Profit was 422.543 + 416.692 + 380.758 + 319.053 = $1,539 Mil.
Total Current Assets was $1,577 Mil.
Total Assets was $4,034 Mil.
Property, Plant and Equipment(Net PPE) was $645 Mil.
Depreciation, Depletion and Amortization(DDA) was $74 Mil.
Selling, General & Admin. Expense(SGA) was $832 Mil.
Total Current Liabilities was $1,704 Mil.
Long-Term Debt was $950 Mil.
Net Income was 108.056 + 97.833 + 85.959 + 53.553 = $345 Mil.
Non Operating Income was -0.196 + -1.812 + -0.318 + -0.371 = $-3 Mil.
Cash Flow from Operations was 0 + 162.185 + -20.044 + 9.317 = $151 Mil.
Accounts Receivable was $771 Mil.
Revenue was 1108.302 + 1089.013 + 1031.219 + 875.242 = $4,104 Mil.
Gross Profit was 355.793 + 369.361 + 338.553 + 294.351 = $1,358 Mil.
Total Current Assets was $1,580 Mil.
Total Assets was $4,026 Mil.
Property, Plant and Equipment(Net PPE) was $633 Mil.
Depreciation, Depletion and Amortization(DDA) was $88 Mil.
Selling, General & Admin. Expense(SGA) was $728 Mil.
Total Current Liabilities was $1,481 Mil.
Long-Term Debt was $1,037 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)
=(840.447 / 4522.424) / (771.396 / 4103.776)
=0.18583994 / 0.18797225
=0.9887

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)
=(416.692 / 4103.776) / (422.543 / 4522.424)
=0.33092888 / 0.3403144
=0.9724

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 - (1577.257 + 645.102) / 4033.951) / (1 - (1580.29 + 633.475) / 4025.509)
=0.44908627 / 0.45006582
=0.9978

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
=4522.424 / 4103.776
=1.102

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))
=(88.159 / (88.159 + 633.475)) / (74.252 / (74.252 + 645.102))
=0.12216581 / 0.10322039
=1.1835

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)
=(832.335 / 4522.424) / (727.825 / 4103.776)
=0.18404621 / 0.17735495
=1.0377

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)
=((950.035 + 1704.421) / 4033.951) / ((1037.392 + 1480.573) / 4025.509)
=0.65802882 / 0.62550227
=1.052

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
=(345.401 - -2.697 - 151.458) / 4033.951
=0.0487

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 -2.19 signals that the company is likely to 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 1.01020.93761.03630.98051.10891.08240.86341.00711.1097
GMI 1.05240.95161.01711.06560.82551.02381.06580.92561.0174
AQI 0.98961.0481.00031.01930.99960.92510.8920.9651.0035
SGI 1.1121.09731.09111.07170.82671.12081.22511.01721.0206
DEPI 0.89821.05971.06170.86470.94711.19380.82811.0411.1898
SGAI 0.98461.0811.01530.95551.22940.90181.02380.99310.9454
LVGI 1.01230.99541.00270.96050.96661.04721.17261.01461.1124
TATA -0.0294-0.0331-0.0088-0.0303-0.0499-0.011-0.0053-0.0162-0.0262
M-score -2.50-2.62-2.39-2.53-2.89-2.34-2.52-2.59-2.48

Valspar Corp Quarterly Data

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
DSRI 0.97531.00710.97770.96980.96571.10971.09661.12151.11180.9887
GMI 0.94480.92560.9380.96980.99591.01741.02231.00320.99810.9724
AQI 0.88260.9651.01030.9940.96221.00351.00021.00881.02880.9978
SGI 1.06911.01721.00360.99330.9941.02061.04341.06851.0941.102
DEPI 0.89051.0411.08991.10741.11791.18981.07111.04181.00391.1835
SGAI 1.01920.99310.98840.95710.93350.94540.95370.99631.0341.0377
LVGI 1.13731.01460.99861.03531.07371.11241.11721.09591.06521.052
TATA -0.0055-0.0162-0.0233-0.0203-0.024-0.0262-0.0288-0.0165-0.00840.0487
M-score -2.60-2.59-2.62-2.62-2.65-2.48-2.50-2.40-2.35-2.19
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