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GuruFocus has detected 6 Warning Signs with Toro Co $TTC.
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Toro Co (NYSE:TTC)
Beneish M-Score
0.00 (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.

Toro Co has a M-score of signals that the company is a manipulator.

During the past 13 years, the highest Beneish M-Score of Toro Co was 0.00. The lowest was -4.41. And the median was -2.74.


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 Toro Co 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 * +0.528 * +0.404 * +0.892 * +0.115 *
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * +4.679 * -0.327 *
=

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

This Year (Apr17) TTM:Last Year (Apr16) TTM:
Accounts Receivable was $329 Mil.
Revenue was 872.767 + 515.839 + 468.356 + 600.98 = $2,458 Mil.
Gross Profit was 316.314 + 193.48 + 172.137 + 216.617 = $899 Mil.
Total Current Assets was $977 Mil.
Total Assets was $1,599 Mil.
Property, Plant and Equipment(Net PPE) was $224 Mil.
Depreciation, Depletion and Amortization(DDA) was $0 Mil.
Selling, General & Admin. Expense(SGA) was $553 Mil.
Total Current Liabilities was $622 Mil.
Long-Term Debt was $312 Mil.
Net Income was 120.475 + 44.99 + 30.23 + 55.822 = $252 Mil.
Non Operating Income was 3.701 + 3.866 + 2.708 + 3.48 = $14 Mil.
Cash Flow from Operations was 155.039 + 15.392 + 73.035 + 151.753 = $395 Mil.
Accounts Receivable was $330 Mil.
Revenue was 836.441 + 486.398 + 480.807 + 609.615 = $2,413 Mil.
Gross Profit was 303.187 + 182.654 + 168.574 + 216.39 = $871 Mil.
Total Current Assets was $950 Mil.
Total Assets was $1,543 Mil.
Property, Plant and Equipment(Net PPE) was $222 Mil.
Depreciation, Depletion and Amortization(DDA) was $0 Mil.
Selling, General & Admin. Expense(SGA) was $546 Mil.
Total Current Liabilities was $601 Mil.
Long-Term Debt was $338 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)
=(328.524 / 2457.942) / (329.837 / 2413.261)
=0.13365816 / 0.13667689
=

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)
=(870.805 / 2413.261) / (898.548 / 2457.942)
=0.36084162 / 0.36556924
=

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 - (976.563 + 224.277) / 1598.758) / (1 - (950.107 + 222.069) / 1542.741)
=0.24889195 / 0.2401991
=

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
=2457.942 / 2413.261
=

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))
=(0 / (0 + 222.069)) / (0 / (0 + 224.277))
=0 / 0
=

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)
=(553.215 / 2457.942) / (545.639 / 2413.261)
=0.22507244 / 0.22610029
=

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)
=((311.957 + 622.415) / 1598.758) / ((337.909 + 600.601) / 1542.741)
=0.58443617 / 0.60833931
=

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
=(251.517 - 13.755 - 395.219) / 1598.758
=-0.0985

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.

Toro Co has a M-score of signals that the company is likely to 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.

Toro Co Annual Data

Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14Oct15Oct16
DSRI 0.90750.89910.67440.85930.99540.97430.9810.9651
GMI 0.96951.041.03610.98361.0090.98340.96790.9976
AQI 1.13011.05721.10751.01261.17230.9051.07560.8348
SGI 1.02231.00070.81111.10961.11451.03971.04221.0643
DEPI 1.02971.72820.54311.33721.03740.87522.55121.1192
SGAI 1.00990.99841.0740.96810.95430.99441.01420.97
LVGI 1.06260.98931.04871.07631.00410.95860.94941.0268
TATA -0.0494-0.1034-0.213-0.1201-0.0028-0.0674-0.0786-0.014
M-score -2.76-2.92-3.96-3.06-2.31-2.83-2.62-2.58

Toro Co Quarterly Data

Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17Apr17
DSRI
GMI
AQI
SGI
DEPI
SGAI
LVGI
TATA
M-score
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