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GuruFocus has detected 2 Warning Signs with VF Corp $VFC.
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VF Corp (NYSE:VFC)
Beneish M-Score
-2.81 (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.

VF Corp has a M-score of -2.81 suggests that the company is not a manipulator.

VFC' s Beneish M-Score Range Over the Past 10 Years
Min: -3.73   Max: -1.16
Current: -2.81

-3.73
-1.16

During the past 13 years, the highest Beneish M-Score of VF Corp was -1.16. The lowest was -3.73. And the median was -2.55.


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 VF 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 * 0.9277+0.528 * 0.9951+0.404 * 0.9844+0.892 * 0.9978+0.115 * 0.9692
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0584+4.679 * -0.0417-0.327 * 1.1322
=-2.81

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

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $1,127 Mil.
Revenue was 3320.574 + 3488.226 + 2445.259 + 2839.3 = $12,093 Mil.
Gross Profit was 1630.169 + 1687.478 + 1176.486 + 1367.294 = $5,861 Mil.
Total Current Assets was $4,293 Mil.
Total Assets was $9,739 Mil.
Property, Plant and Equipment(Net PPE) was $940 Mil.
Depreciation, Depletion and Amortization(DDA) was $282 Mil.
Selling, General & Admin. Expense(SGA) was $4,279 Mil.
Total Current Liabilities was $1,785 Mil.
Long-Term Debt was $2,039 Mil.
Net Income was 264.333 + 498.489 + 51.015 + 260.269 = $1,074 Mil.
Non Operating Income was 0.305 + -1.097 + 1.501 + 1.29 = $2 Mil.
Cash Flow from Operations was 1434.551 + 31.594 + 157.36 + -145.586 = $1,478 Mil.
Accounts Receivable was $1,217 Mil.
Revenue was 3326.279 + 3529.626 + 2426.986 + 2837.301 = $12,120 Mil.
Gross Profit was 1603.911 + 1685.185 + 1166.048 + 1390.754 = $5,846 Mil.
Total Current Assets was $4,163 Mil.
Total Assets was $9,640 Mil.
Property, Plant and Equipment(Net PPE) was $945 Mil.
Depreciation, Depletion and Amortization(DDA) was $272 Mil.
Selling, General & Admin. Expense(SGA) was $4,051 Mil.
Total Current Liabilities was $1,942 Mil.
Long-Term Debt was $1,402 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)
=(1126.811 / 12093.359) / (1217.379 / 12120.192)
=0.09317602 / 0.10044222
=0.9277

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)
=(5845.898 / 12120.192) / (5861.427 / 12093.359)
=0.48232718 / 0.48468147
=0.9951

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 - (4293.098 + 939.65) / 9739.287) / (1 - (4163.136 + 945.491) / 9639.542)
=0.46271755 / 0.47003426
=0.9844

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
=12093.359 / 12120.192
=0.9978

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))
=(272.075 / (272.075 + 945.491)) / (281.577 / (281.577 + 939.65))
=0.22345811 / 0.23056893
=0.9692

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)
=(4278.558 / 12093.359) / (4051.485 / 12120.192)
=0.35379401 / 0.33427565
=1.0584

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)
=((2039.18 + 1785.4) / 9739.287) / ((1401.82 + 1941.713) / 9639.542)
=0.3926961 / 0.346856
=1.1322

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
=(1074.106 - 1.999 - 1477.919) / 9739.287
=-0.0417

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.

VF Corp has a M-score of -2.81 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.

VF Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.03260.82820.96510.93371.180.94870.9940.9021.00430.9267
GMI 0.9990.98940.99320.94751.02010.9840.96810.98981.00780.9945
AQI 1.16380.99831.0220.94081.23350.9610.9590.92810.94990.9844
SGI 1.16151.05860.94471.06681.22811.15021.04961.04051.01270.9989
DEPI 1.00230.86680.94560.97261.05220.95111.04520.94551.01070.9692
SGAI 0.99881.05151.0221.0330.97591.01341.01750.99350.9971.0598
LVGI 1.1710.94680.93871.0081.18580.87380.88461.05931.12781.1322
TATA -0.036-0.0113-0.0794-0.0673-0.02-0.0245-0.0283-0.0720.0028-0.0417
M-score -2.46-2.65-2.92-2.86-2.15-2.50-2.57-2.93-2.51-2.81

VF Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.98760.9020.95050.97661.06190.99710.99250.98120.94440.9277
GMI 0.98520.98980.99820.99931.00721.00661.00891.00710.99970.9951
AQI 0.94830.92810.89550.9110.89830.94990.99970.98051.00710.9844
SGI 1.07441.04051.03021.01640.99821.02011.01541.01481.01060.9978
DEPI 0.96980.94550.94260.98021.03411.01071.07051.00130.95640.9692
SGAI 1.00720.99350.99040.98790.98051.00031.00881.01281.02451.0584
LVGI 1.02441.05931.2921.22111.15411.12781.04121.06571.10011.1322
TATA -0.0144-0.072-0.0319-0.0242-0.00680.0028-0.0262-0.04-0.039-0.0417
M-score -2.53-2.93-2.79-2.71-2.54-2.51-2.60-2.70-2.74-2.81
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