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Toshiba Fraud Case

Toshiba was accused of fraudulently inflating its profits over multiple years. The document analyzes Toshiba's financial statements from 2012-2014 using various ratios to detect signs of fraud, including the Beneish M-Score model. The analysis found deteriorating net income and cash flows over this period. Several fraud detection ratios like the Depreciation Index and Gross Margin Index showed abnormal values. The overall M-Score, which is an aggregate measure of fraud likelihood, was negative for all years, highest in 2013-2014, indicating higher risk of fraud.

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Shashank Varma
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466 views23 pages

Toshiba Fraud Case

Toshiba was accused of fraudulently inflating its profits over multiple years. The document analyzes Toshiba's financial statements from 2012-2014 using various ratios to detect signs of fraud, including the Beneish M-Score model. The analysis found deteriorating net income and cash flows over this period. Several fraud detection ratios like the Depreciation Index and Gross Margin Index showed abnormal values. The overall M-Score, which is an aggregate measure of fraud likelihood, was negative for all years, highest in 2013-2014, indicating higher risk of fraud.

Uploaded by

Shashank Varma
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Toshiba Fraud Case

By: Aarohi Surya


Abhishek Yadav
Ajitesh Goyal
Ayushi Agarwal
Kinshuk Goel
Milan Ashar
Vertical Analysis
60.00

51.81 52.37
51.42

50.00

40.00

30.00

23.77
22.20 22.39

20.00

10.00

3.43 3.74
2.75

0.00
Cash and cash equivalents Accounts Total current assets

2014 2013 2012


50.00

46.40
44.93
45.00

41.53

40.00

35.00

30.00

25.00
22.56

20.00 19.22 19.49

15.00

10.00

5.00

0.00
Notes and Accounts payable Total current liabilities

2014 2013 2012


HORIZONTAL
ANALYSIS
(BALANCE SHEET)
CURRENT ASSETS
Cash and cash equivalents

25.24

14.86

1 2
NON-CURRENT ASSETS

Long Term Recievables

98.62

46.1

1 2
Deferred income taxes, non-current

28.27

22.14

1 2
LIABILITIES AND EQUITY

Short Term borrowings

39.74

30.35

1 2
LONG TERM DEBTS
Current Portion of long term debt

78.32

2.03
1 2
Deffered

313.59

56.90

1 2
Cash Flow Statement Analysis
Cash Flow from Operating Activities
Drastic drop of net income from 2013 to 2014
($1,018,362,000 to $675,903,000)
Highest cash generated from operating activities
approximately $4B in 2012 (highest) and it fell in
2013 & then rose again in 2014 to $2.7B.
Cash Flow from Investing Activities
Cash was used in investing activities during all 3
years 2012, 2013, 2014.
It shows that Toshiba was investing in long-term
assets.
Cash Flow from Financing
Activities
Net cash used in financing activities
was around $2.9M in 2012,
generated $443M in 2013 & used
$867M in 2014.
Paying dividends regularly.
Fraud Ratio
Beneish M Score

TheM scoreis based on a combination of the


followingeight different indices:

DSRI
GMI
AQI
SGI
DEPI
SGAI
LVGI
TATA
DSRI
DSRI
0
2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

-0.5

-1

-1.5 DSRI

-2

-2.5

-3

-3.5
Gross Margin Index
Gross Margin Index
0
0 1 2 3 4 5 6 7 8

-0.5

-1

-1.5 Gross Margin Index

-2

-2.5

-3

-3.5
Asset Quality Index
Asset Quality Index
0
2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

-0.5

-1

-1.5 Asset Quality Index

-2

-2.5

-3

-3.5
Depreciation Index
Depreciation index
0
0 1 2 3 4 5 6 7 8

-0.5

-1

-1.5 Depreciation index

-2

-2.5

-3

-3.5
Leverage index
Levarage Index
1.2

0.8

Levarage Index
0.6

0.4

0.2

0
0 1 2 3 4 5 6 7 8
M Score
M= -4.84 + 0.92*DSRI + 0.528*GMI
+ 0.404*AQI + 0.892*SGI +
0.115*DEPI 0.172*SGAI +
4.679*TATA 0.327*LVGI
M score
0
0 1 2 3 4 5 6 7 8
-0.5

-1

M score
-1.5

-2

-2.5

-3

-3.5
fraud ratios 2007-08 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14

Levarage Index 0.99 1.12 0.9 0.96 1.02 0.99 0.98

Depreciation index 1.005 0.99 0.98 0.99 0.98 0.98 0.97

total accruals to total assets -0.019 0.023 -0.016 -0.111 -0.033 -0.014 -0.006

SGAI 0.99 1.05 0.91 0.93 1.04 1.01 0.98

DSRI 0.88 0.94 1.16 0.92 1.21 1.09 0.96

Asset Quality Index 1.03 1.06 1.57 0.99 1.05 1.02 0.98

Gross Margin Index 1.01 1.28 0.84 0.98 0.98 0.99 0.97

Sales Growth Index 1.08 0.88 0.94 1.02 0.96 0.96 1.13

M score -2.58 -2.408 -2.27 -3.08 -2.48 -2.54 -2.08


Group 4

THANK YOU

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