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The Valspar Corp (NYSE:VAL)
Beneish M-Score
-2.45 (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 -2.45 suggests that the company is not a manipulator.

VAL' s Beneish M-Score Range Over the Past 10 Years
Min: -3.07   Max: -2.22
Current: -2.45

-3.07
-2.22

During the past 13 years, the highest Beneish M-Score of The Valspar Corp was -2.22. The lowest was -3.07. And the median was -2.48.


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 * 1.0501+0.528 * 0.9636+0.404 * 1.0594+0.892 * 0.9713+0.115 * 1.0596
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0021+4.679 * 0.0044-0.327 * 1.0816
=-2.45

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

This Year (Oct15) TTM:Last Year (Oct14) TTM:
Accounts Receivable was $857 Mil.
Revenue was 1149.538 + 1149.126 + 1079.289 + 1014.669 = $4,393 Mil.
Gross Profit was 413.611 + 411.283 + 393.203 + 333.292 = $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 102.356 + 102.862 + 90.314 + 103.974 = $400 Mil.
Non Operating Income was -2.039 + -0.07 + -1.694 + 0.965 = $-3 Mil.
Cash Flow from Operations was 270.604 + 130.283 + 5.635 + -23.322 = $383 Mil.
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 $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 / 4522.424)
=0.19515815 / 0.18583994
=1.0501

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)
=(411.283 / 4522.424) / (413.611 / 4392.622)
=0.3403144 / 0.35318063
=0.9636

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 / 4522.424
=0.9713

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 / 4522.424)
=0.18443108 / 0.18404621
=1.0021

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 -2.45 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.

The Valspar Corp Annual Data

Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14Oct15
DSRI 0.93761.03630.98051.10891.08240.86341.00711.10970.98871.0501
GMI 0.95161.01711.06560.82551.02381.06580.92561.01740.97240.9636
AQI 1.0481.00031.01930.99960.92510.8920.9651.00350.99781.0594
SGI 1.09731.09111.07170.82671.12081.22511.01721.02061.1020.9713
DEPI 1.05971.06170.86470.94711.19380.82811.0411.18980.90321.0596
SGAI 1.0811.01530.95551.22940.90181.02380.99310.94541.03771.0021
LVGI 0.99541.00270.96050.96661.04721.17261.01461.11241.0521.0816
TATA -0.0331-0.0088-0.0303-0.0499-0.011-0.0053-0.0162-0.02620.00020.0044
M-score -2.62-2.39-2.53-2.89-2.34-2.52-2.59-2.48-2.45-2.45

The Valspar Corp Quarterly Data

Jul13Oct13Jan14Apr14Jul14Oct14Jan15Apr15Jul15Oct15
DSRI 0.96571.10971.09661.1241.11180.98871.01960.89720.98911.0501
GMI 0.99591.01741.02231.00320.99810.97240.97450.96250.96040.9636
AQI 0.96221.00351.00021.00881.02880.99780.97760.99541.02851.0594
SGI 0.9941.02061.04341.06851.0941.1021.09471.05751.01780.9713
DEPI 1.11791.18981.07111.04181.00390.90320.97681.00051.03431.0596
SGAI 0.93350.94540.95370.99631.0341.03771.02351.0240.9991.0021
LVGI 1.07371.11241.11721.09591.06521.0521.06091.05951.10551.0816
TATA -0.024-0.0262-0.0288-0.0165-0.00840.00020.02060.01580.02140.0044
M-score -2.65-2.48-2.50-2.40-2.35-2.45-2.33-2.49-2.41-2.45
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