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Valspar Corp (NYSE:VAL)
Beneish M-Score
-2.49 (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 -2.49 suggests that the company is not a manipulator.

VAL' s 10-Year Beneish M-Score Range
Min: -3.13   Max: -1.94
Current: -2.49

-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 * 0.9231+0.528 * 0.9517+0.404 * 0.9954+0.892 * 1.0457+0.115 * 1.0005
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.04+4.679 * 0.0158-0.327 * 1.0595
=-2.49

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

This Year (Apr15) TTM:Last Year (Apr14) TTM:
Accounts Receivable was $823 Mil.
Revenue was 1079.289 + 1014.669 + 1233.065 + 1203.062 = $4,530 Mil.
Gross Profit was 393.203 + 333.292 + 422.543 + 416.692 = $1,566 Mil.
Total Current Assets was $1,599 Mil.
Total Assets was $3,979 Mil.
Property, Plant and Equipment(Net PPE) was $607 Mil.
Depreciation, Depletion and Amortization(DDA) was $94 Mil.
Selling, General & Admin. Expense(SGA) was $837 Mil.
Total Current Liabilities was $1,402 Mil.
Long-Term Debt was $1,350 Mil.
Net Income was 90.314 + 103.974 + 108.056 + 97.833 = $400 Mil.
Non Operating Income was -1.694 + 0.965 + -0.196 + -1.812 = $-3 Mil.
Cash Flow from Operations was 5.635 + -23.322 + 195.646 + 162.185 = $340 Mil.
Accounts Receivable was $853 Mil.
Revenue was 1155.826 + 979.117 + 1108.302 + 1089.013 = $4,332 Mil.
Gross Profit was 380.758 + 319.053 + 355.793 + 369.361 = $1,425 Mil.
Total Current Assets was $1,622 Mil.
Total Assets was $4,092 Mil.
Property, Plant and Equipment(Net PPE) was $638 Mil.
Depreciation, Depletion and Amortization(DDA) was $99 Mil.
Selling, General & Admin. Expense(SGA) was $770 Mil.
Total Current Liabilities was $1,579 Mil.
Long-Term Debt was $1,092 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)
=(823.014 / 4530.085) / (852.678 / 4332.258)
=0.18167739 / 0.19682069
=0.9231

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)
=(333.292 / 4332.258) / (393.203 / 4530.085)
=0.3289197 / 0.34562928
=0.9517

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 - (1599.134 + 607.081) / 3978.86) / (1 - (1622.498 + 638.096) / 4092.162)
=0.4455158 / 0.44757954
=0.9954

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
=4530.085 / 4332.258
=1.0457

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))
=(98.616 / (98.616 + 638.096)) / (93.768 / (93.768 + 607.081))
=0.13385964 / 0.13379202
=1.0005

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)
=(837.466 / 4530.085) / (770.103 / 4332.258)
=0.18486761 / 0.17776019
=1.04

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)
=((1350.005 + 1402.007) / 3978.86) / ((1092.419 + 1579.096) / 4092.162)
=0.69165841 / 0.65283706
=1.0595

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
=(400.177 - -2.737 - 340.144) / 3978.86
=0.0158

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 -2.49 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 0.98461.0811.01530.95551.24520.89031.02380.98070.94851.0474
LVGI 1.01230.99541.00270.96050.96661.04721.17261.01461.11241.052
TATA -0.0294-0.0331-0.0088-0.0303-0.0499-0.0117-0.1223-0.0162-0.02620.0002
M-score -2.50-2.62-2.39-2.53-2.90-2.34-3.07-2.58-2.48-2.45

Valspar Corp Quarterly Data

Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15Apr15
DSRI 0.97770.96980.96571.10971.09061.10891.09970.97811.01950.9231
GMI 0.9380.96980.99591.01741.02791.01451.00920.98290.97460.9517
AQI 1.01030.9940.96221.00351.00021.00881.02880.99780.97760.9954
SGI 1.00360.99330.9941.02061.04921.08061.10611.11391.09481.0457
DEPI 1.08991.10741.11791.18981.07111.04181.00390.90320.97681.0005
SGAI 0.97880.95190.93240.94770.95110.98981.0291.03411.03061.04
LVGI 0.99861.03531.07371.11241.11721.09591.06521.0521.06091.0595
TATA -0.0233-0.0203-0.024-0.0262-0.0288-0.0165-0.00840.00020.02060.0158
M-score -2.62-2.62-2.65-2.48-2.49-2.40-2.34-2.44-2.33-2.49
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