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Valspar Corp (NYSE:VAL)
Beneish M-Score
-2.35 (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 -2.35 suggests that the company is not a manipulator.

VAL' s 10-Year Beneish M-Score Range
Min: -3.13   Max: -1.94
Current: -2.35

-3.13
-1.94

During the past 13 years, the highest Beneish M-Score of Valspar Corp was -1.94. The lowest was -3.13. 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 * 1.1118+0.528 * 0.9981+0.404 * 1.0288+0.892 * 1.094+0.115 * 1.0039
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0461+4.679 * -0.0084-0.327 * 1.0652
=-2.35

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

This Year (Jul14) TTM:Last Year (Jul13) TTM:
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 $816 Mil.
Total Current Liabilities was $1,670 Mil.
Long-Term Debt was $1,078 Mil.
Net Income was 97.833 + 85.959 + 53.553 + 63.51 = $301 Mil.
Non Operating Income was -1.812 + -0.318 + -0.371 + -1.829 = $-4 Mil.
Cash Flow from Operations was 162.185 + -20.044 + 9.317 + 188.901 = $340 Mil.
Accounts Receivable was $716 Mil.
Revenue was 1089.013 + 1031.219 + 875.242 + 1024.284 = $4,020 Mil.
Gross Profit was 369.361 + 338.553 + 294.351 + 340.998 = $1,343 Mil.
Total Current Assets was $1,636 Mil.
Total Assets was $3,844 Mil.
Property, Plant and Equipment(Net PPE) was $556 Mil.
Depreciation, Depletion and Amortization(DDA) was $87 Mil.
Selling, General & Admin. Expense(SGA) was $713 Mil.
Total Current Liabilities was $1,360 Mil.
Long-Term Debt was $1,013 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)
=(870.954 / 4397.661) / (716.033 / 4019.758)
=0.19804937 / 0.17812838
=1.1118

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)
=(380.758 / 4019.758) / (416.692 / 4397.661)
=0.33416514 / 0.3347907
=0.9981

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 - (1688.35 + 643.069) / 4179.798) / (1 - (1635.91 + 555.568) / 3843.515)
=0.4422173 / 0.42982452
=1.0288

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
=4397.661 / 4019.758
=1.094

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))
=(87.116 / (87.116 + 555.568)) / (100.383 / (100.383 + 643.069))
=0.13555029 / 0.13502284
=1.0039

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)
=(815.99 / 4397.661) / (713.01 / 4019.758)
=0.18555091 / 0.17737635
=1.0461

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)
=((1077.921 + 1670.424) / 4179.798) / ((1012.55 + 1359.909) / 3843.515)
=0.65753058 / 0.61726284
=1.0652

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
=(300.855 - -4.33 - 340.359) / 4179.798
=-0.0084

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 -2.35 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

Oct04Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13
DSRI 0.98431.01020.93761.03630.98051.10891.08240.86341.00711.1097
GMI 1.03071.05240.95161.01711.06560.82551.02381.06580.92561.0174
AQI 0.99010.98961.0481.00031.01930.99960.92510.8920.9651.0035
SGI 1.08581.1121.09731.09111.07170.82671.12081.22511.01721.0206
DEPI 0.95620.89821.05971.06170.86470.94711.19380.82811.0411.1898
SGAI 0.89640.98461.0811.01530.95551.24520.89031.02380.99310.9454
LVGI 0.93811.01230.99541.00270.96050.96661.04721.17261.01461.1124
TATA -0.039-0.0294-0.0331-0.0088-0.0303-0.0499-0.011-0.0053-0.0162-0.0262
M-score -2.56-2.50-2.62-2.39-2.53-2.90-2.34-2.52-2.59-2.48

Valspar Corp Quarterly Data

Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14
DSRI 0.92640.97531.00710.97770.96980.96571.10971.09661.12151.1118
GMI 0.99590.94480.92560.9380.96980.99591.01741.02231.00320.9981
AQI 0.87530.88260.9651.01030.9940.96221.00351.00021.00881.0288
SGI 1.12551.06911.01721.00360.99330.9941.02061.04341.06851.094
DEPI 0.84480.89051.0411.08991.10741.11791.18981.07111.04181.0039
SGAI 1.01151.01920.99310.98840.95450.92860.94730.95561.00341.0461
LVGI 1.11421.13731.01460.99861.03531.07371.11241.11721.09591.0652
TATA -0.1215-0.1185-0.0162-0.0233-0.0203-0.024-0.0262-0.0288-0.0165-0.0084
M-score -3.11-3.13-2.59-2.62-2.62-2.64-2.48-2.50-2.41-2.35
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