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The Valspar Corp (NYSE:VAL)
Beneish M-Score
-2.68 (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 -2.68 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: -2.68

-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 * 0.9828+0.528 * 0.9246+0.404 * 1.0949+0.892 * 0.9147+0.115 * 1.0571
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.064+4.679 * -0.0179-0.327 * 1.048
=-2.68

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

This Year (Jan16) TTM:Last Year (Jan15) TTM:
Accounts Receivable was $672 Mil.
Revenue was 885.756 + 1149.538 + 1149.126 + 1079.289 = $4,264 Mil.
Gross Profit was 318.627 + 413.611 + 411.283 + 393.203 = $1,537 Mil.
Total Current Assets was $1,502 Mil.
Total Assets was $4,175 Mil.
Property, Plant and Equipment(Net PPE) was $629 Mil.
Depreciation, Depletion and Amortization(DDA) was $92 Mil.
Selling, General & Admin. Expense(SGA) was $812 Mil.
Total Current Liabilities was $1,225 Mil.
Long-Term Debt was $1,708 Mil.
Net Income was 52.431 + 102.356 + 102.862 + 90.314 = $348 Mil.
Non Operating Income was -0.615 + -2.039 + -0.07 + -1.694 = $-4 Mil.
Cash Flow from Operations was 20.489 + 270.604 + 130.283 + 5.635 = $427 Mil.
Accounts Receivable was $748 Mil.
Revenue was 1014.669 + 1261.377 + 1229.304 + 1155.826 = $4,661 Mil.
Gross Profit was 333.292 + 422.543 + 416.692 + 380.758 = $1,553 Mil.
Total Current Assets was $1,593 Mil.
Total Assets was $4,007 Mil.
Property, Plant and Equipment(Net PPE) was $622 Mil.
Depreciation, Depletion and Amortization(DDA) was $97 Mil.
Selling, General & Admin. Expense(SGA) was $835 Mil.
Total Current Liabilities was $1,336 Mil.
Long-Term Debt was $1,350 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)
=(672.296 / 4263.709) / (747.8 / 4661.176)
=0.15767868 / 0.16043162
=0.9828

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)
=(413.611 / 4661.176) / (318.627 / 4263.709)
=0.33323887 / 0.36041953
=0.9246

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 - (1501.722 + 629.16) / 4175.241) / (1 - (1592.898 + 622.054) / 4006.861)
=0.48963856 / 0.44721017
=1.0949

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
=4263.709 / 4661.176
=0.9147

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))
=(96.669 / (96.669 + 622.054)) / (91.723 / (91.723 + 629.16))
=0.13450105 / 0.12723701
=1.0571

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)
=(812.452 / 4263.709) / (834.741 / 4661.176)
=0.19055053 / 0.17908378
=1.064

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)
=((1708.431 + 1225.322) / 4175.241) / ((1350.081 + 1336.352) / 4006.861)
=0.70265477 / 0.67045825
=1.048

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
=(347.963 - -4.418 - 427.011) / 4175.241
=-0.0179

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 -2.68 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 0.93761.03630.98051.10891.08240.86341.00711.08560.98811.0741
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

The Valspar Corp Quarterly Data

Oct13Jan14Apr14Jul14Oct14Jan15Apr15Jul15Oct15Jan16
DSRI 1.08561.06741.07011.07140.98811.02940.93131.021.07410.9828
GMI 1.041.05021.03591.03580.9730.96520.94330.93130.94210.9246
AQI 1.00351.00021.00881.02880.99780.97760.99541.02851.05941.0949
SGI 1.04331.07191.10341.13531.10271.08431.03640.9870.94960.9147
DEPI 1.18981.07111.04181.00390.90320.97681.00051.03431.05961.0571
SGAI 0.93530.93920.97831.01181.04461.04061.04921.0321.0251.064
LVGI 1.11241.11721.09591.06521.0521.06091.05951.10551.08161.048
TATA -0.0262-0.0288-0.0165-0.00840.00020.02060.01580.02140.0044-0.0179
M-score -2.47-2.48-2.40-2.33-2.45-2.34-2.50-2.43-2.47-2.68
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