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The Valspar Corp (NYSE:VAL)
Beneish M-Score
-2.70 (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.

The Valspar Corp has a M-score of -2.47 suggests that the company is not a manipulator.

VAL' s Beneish M-Score Range Over the Past 10 Years
Min: -3.13   Max: -1.94
Current: -2.7

-3.13
-1.94

During the past 13 years, the highest Beneish M-Score of The 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 The 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 * 1.0741+0.528 * 0.9421+0.404 * 1.0594+0.892 * 0.9496+0.115 * 1.0596
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.025+4.679 * 0.0044-0.327 * 1.0816
=-2.47

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Oct15) TTM:Last Year (Oct14) TTM:
Accounts Receivable was $857 Mil.
Revenue was $4,393 Mil.
Gross Profit was $1,551 Mil.
Total Current Assets was $1,631 Mil.
Total Assets was $4,319 Mil.
Property, Plant and Equipment(Net PPE) was $633 Mil.
Depreciation, Depletion and Amortization(DDA) was $93 Mil.
Selling, General & Admin. Expense(SGA) was $810 Mil.
Total Current Liabilities was $1,367 Mil.
Long-Term Debt was $1,707 Mil.
Net Income was $400 Mil.
Non Operating Income was $-3 Mil.
Cash Flow from Operations was $383 Mil.
Accounts Receivable was $840 Mil.
Revenue was $4,626 Mil.
Gross Profit was $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 $101 Mil.
Selling, General & Admin. Expense(SGA) was $832 Mil.
Total Current Liabilities was $1,704 Mil.
Long-Term Debt was $950 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)
=(857.256 / 4392.622) / (840.447 / 4625.624)
=0.19515815 / 0.18169376
=1.0741

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)
=(1539.046 / 4625.624) / (1551.389 / 4392.622)
=0.33272181 / 0.35318063
=0.9421

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 - (1631.23 + 632.765) / 4318.575) / (1 - (1577.257 + 645.102) / 4033.951)
=0.47575416 / 0.44908627
=1.0594

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
=4392.622 / 4625.624
=0.9496

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))
=(100.91 / (100.91 + 645.102)) / (92.603 / (92.603 + 632.765))
=0.13526592 / 0.12766348
=1.0596

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)
=(810.136 / 4392.622) / (832.335 / 4625.624)
=0.18443108 / 0.17994005
=1.025

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)
=((1706.933 + 1366.739) / 4318.575) / ((950.035 + 1704.421) / 4033.951)
=0.71173292 / 0.65802882
=1.0816

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
=(399.506 - -2.838 - 383.2) / 4318.575
=0.0044

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.

The Valspar Corp has a M-score of -2.47 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 local exchange's currency.

The Valspar Corp Annual Data

Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14Oct15
DSRI 0.93761.03630.98051.10891.08240.86341.00711.08560.98811.0741
GMI 0.95161.01711.06560.82551.02381.06580.92561.040.9730.9421
AQI 1.0481.00031.01930.99960.92510.8920.9651.00350.99781.0594
SGI 1.09731.09111.07170.82671.12081.22511.01721.04331.10270.9496
DEPI 1.05971.06170.86470.94711.19380.82811.0411.18980.90321.0596
SGAI 1.0811.01530.95551.24520.89031.01030.98510.93611.04681.025
LVGI 0.99541.00270.96050.96661.04721.17261.01461.11241.0521.0816
TATA -0.0331-0.0088-0.0303-0.0499-0.0117-0.1223-0.0162-0.02620.00020.0044
M-score -2.62-2.39-2.53-2.90-2.34-3.06-2.58-2.47-2.45-2.47
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