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GuruFocus has detected 5 Warning Signs with Clorox Co $CLX.
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Clorox Co (NYSE:CLX)
Beneish M-Score
-2.57 (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.

Clorox Co has a M-score of -2.57 suggests that the company is not a manipulator.

CLX' s Beneish M-Score Range Over the Past 10 Years
Min: -3.7   Max: -2.15
Current: -2.57

-3.7
-2.15

During the past 13 years, the highest Beneish M-Score of Clorox Co was -2.15. The lowest was -3.70. And the median was -2.67.


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 Clorox 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 * 1.0508+0.528 * 0.9921+0.404 * 1.0698+0.892 * 1.032+0.115 * 1.0302
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0362+4.679 * -0.0412-0.327 * 0.9931
=-2.57

* 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 $514 Mil.
Revenue was 1406 + 1443 + 1600 + 1426 = $5,875 Mil.
Gross Profit was 629 + 640 + 727 + 646 = $2,642 Mil.
Total Current Assets was $1,549 Mil.
Total Assets was $4,568 Mil.
Property, Plant and Equipment(Net PPE) was $904 Mil.
Depreciation, Depletion and Amortization(DDA) was $165 Mil.
Selling, General & Admin. Expense(SGA) was $1,420 Mil.
Total Current Liabilities was $2,037 Mil.
Long-Term Debt was $1,390 Mil.
Net Income was 149 + 179 + 165 + 162 = $655 Mil.
Non Operating Income was -23 + 5 + 0 + -2 = $-20 Mil.
Cash Flow from Operations was 100 + 170 + 331 + 262 = $863 Mil.
Accounts Receivable was $474 Mil.
Revenue was 1345 + 1390 + 1557 + 1401 = $5,693 Mil.
Gross Profit was 600 + 625 + 710 + 605 = $2,540 Mil.
Total Current Assets was $1,490 Mil.
Total Assets was $4,175 Mil.
Property, Plant and Equipment(Net PPE) was $878 Mil.
Depreciation, Depletion and Amortization(DDA) was $166 Mil.
Selling, General & Admin. Expense(SGA) was $1,328 Mil.
Total Current Liabilities was $1,358 Mil.
Long-Term Debt was $1,796 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)
=(514 / 5875) / (474 / 5693)
=0.08748936 / 0.08326014
=1.0508

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)
=(2540 / 5693) / (2642 / 5875)
=0.44616195 / 0.44970213
=0.9921

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 - (1549 + 904) / 4568) / (1 - (1490 + 878) / 4175)
=0.4630035 / 0.43281437
=1.0698

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
=5875 / 5693
=1.032

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))
=(166 / (166 + 878)) / (165 / (165 + 904))
=0.15900383 / 0.15434986
=1.0302

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)
=(1420 / 5875) / (1328 / 5693)
=0.24170213 / 0.23326893
=1.0362

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)
=((1390 + 2037) / 4568) / ((1796 + 1358) / 4175)
=0.75021891 / 0.7554491
=0.9931

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
=(655 - -20 - 863) / 4568
=-0.0412

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.

Clorox Co has a M-score of -2.57 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.

Clorox Co Annual Data

Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15Jun16
DSRI 1.01321.00910.93111.1570.97281.04960.99510.94460.92681.0762
GMI 0.97781.04590.95820.97151.01971.03120.97511.01140.98020.9666
AQI 0.98961.20741.00580.86270.9630.98340.99531.02110.98521.0789
SGI 1.04371.08791.03360.96040.99941.04531.01190.99661.02561.0187
DEPI 0.95950.93421.06981.03271.11581.00960.94330.97720.98651.0092
SGAI 0.98910.96860.99881.05331.00790.98990.99670.97471.02721.0351
LVGI 0.94231.15350.960.92761.01160.99480.9190.99071.01250.966
TATA -0.0586-0.0565-0.0382-0.042-0.0408-0.0207-0.0494-0.0507-0.0728-0.0292
M-score -2.70-2.60-2.69-2.62-2.69-2.48-2.70-2.75-2.89-2.51

Clorox Co Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.90170.94120.93750.92681.00640.97870.98221.07621.02481.0508
GMI 1.01891.01811.01190.98020.96430.95420.94910.96660.98180.9921
AQI 1.02420.90910.99720.98520.9851.10180.9821.07891.08661.0698
SGI 0.99731.00711.02211.02561.03081.02391.0221.01871.02131.032
DEPI 0.95840.96790.96770.98650.9920.98851.0071.00921.0411.0302
SGAI 0.96610.95820.99161.02721.03891.04511.03611.03511.04031.0362
LVGI 0.97090.99150.9331.01251.01930.99771.01470.9660.96470.9931
TATA -0.0786-0.0676-0.0653-0.0728-0.0315-0.0263-0.038-0.0292-0.034-0.0412
M-score -2.91-2.86-2.80-2.89-2.63-2.59-2.70-2.51-2.56-2.57
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