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Clorox Co (NYSE:CLX)
Beneish M-Score
-2.86 (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 -2.85 suggests that the company is not a manipulator.

CLX' s 10-Year Beneish M-Score Range
Min: -3.7   Max: -2.15
Current: -2.86

-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 -2.68.


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 * 0.9508+0.528 * 1.0163+0.404 * 0.9091+0.892 * 0.997+0.115 * 0.9632
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9607+4.679 * -0.065-0.327 * 0.9915
=-2.85

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $473 Mil.
Revenue was 1345 + 1352 + 1511 + 1386 = $5,594 Mil.
Gross Profit was 572 + 578 + 639 + 579 = $2,368 Mil.
Total Current Assets was $1,905 Mil.
Total Assets was $4,674 Mil.
Property, Plant and Equipment(Net PPE) was $933 Mil.
Depreciation, Depletion and Amortization(DDA) was $177 Mil.
Selling, General & Admin. Expense(SGA) was $1,247 Mil.
Total Current Liabilities was $1,744 Mil.
Long-Term Debt was $1,795 Mil.
Net Income was 125 + 90 + 170 + 137 = $522 Mil.
Non Operating Income was 2 + -3 + 3 + -10 = $-8 Mil.
Cash Flow from Operations was 34 + 243 + 337 + 220 = $834 Mil.
Accounts Receivable was $499 Mil.
Revenue was 1308 + 1343 + 1547 + 1413 = $5,611 Mil.
Gross Profit was 555 + 584 + 680 + 595 = $2,414 Mil.
Total Current Assets was $1,500 Mil.
Total Assets was $4,388 Mil.
Property, Plant and Equipment(Net PPE) was $992 Mil.
Depreciation, Depletion and Amortization(DDA) was $180 Mil.
Selling, General & Admin. Expense(SGA) was $1,302 Mil.
Total Current Liabilities was $1,181 Mil.
Long-Term Debt was $2,170 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)
=(473 / 5594) / (499 / 5611)
=0.08455488 / 0.08893245
=0.9508

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)
=(578 / 5611) / (572 / 5594)
=0.43022634 / 0.42331069
=1.0163

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 - (1905 + 933) / 4674) / (1 - (1500 + 992) / 4388)
=0.3928113 / 0.43208751
=0.9091

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
=5594 / 5611
=0.997

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))
=(180 / (180 + 992)) / (177 / (177 + 933))
=0.15358362 / 0.15945946
=0.9632

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)
=(1247 / 5594) / (1302 / 5611)
=0.22291741 / 0.2320442
=0.9607

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)
=((1795 + 1744) / 4674) / ((2170 + 1181) / 4388)
=0.75716731 / 0.76367366
=0.9915

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
=(522 - -8 - 834) / 4674
=-0.065

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 -2.85 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.

Clorox Co Annual Data

Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14
DSRI 0.84751.00011.01321.00910.93111.1570.97281.32110.77790.9468
GMI 1.01871.02380.97781.04590.95820.97151.01971.03120.98231.0162
AQI 0.93141.05070.98961.20741.00580.86270.9630.98340.99531.0211
SGI 1.05431.05831.04371.08791.03360.96040.99941.04531.02830.9943
DEPI 0.98370.98160.95950.93421.06041.04191.11581.00960.93450.9724
SGAI 0.97111.03590.98910.96860.99881.05331.00790.98990.99290.9765
LVGI 2.11030.89250.94231.15350.960.92761.01160.99480.9190.9907
TATA 0.0852-0.0221-0.0586-0.0565-0.0382-0.042-0.0394-0.0186-0.0464-0.0479
M-score -2.55-2.47-2.70-2.60-2.69-2.62-2.69-2.22-2.87-2.74

Clorox Co Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.09770.99040.97160.77790.98330.97550.98620.95410.91070.9508
GMI 1.01071.00430.99540.98230.98510.99030.99081.00971.01721.0163
AQI 0.9030.95190.96410.99531.08631.02441.02861.02111.02420.9091
SGI 1.04381.05521.03851.02831.02311.00110.99410.98670.98740.997
DEPI 1.04790.98410.9780.93450.90670.94760.95080.97240.95390.9632
SGAI 0.99110.99480.98030.99290.98880.99280.98660.97710.96850.9607
LVGI 0.98650.91050.9110.9190.94670.97071.0210.99070.97090.9915
TATA -0.0314-0.0475-0.0464-0.0464-0.0384-0.0189-0.0297-0.0479-0.0757-0.065
M-score -2.52-2.65-2.68-2.87-2.62-2.58-2.64-2.74-2.90-2.85
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