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Clorox Co (NYSE:CLX)
Beneish M-Score
-2.64 (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 -2.64 suggests that the company is not a manipulator.

CLX' s 10-Year Beneish M-Score Range
Min: -3.7   Max: -2.15
Current: -2.64

-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 * 0.9787+0.528 * 0.9972+0.404 * 1.0286+0.892 * 1.0018+0.115 * 0.9508
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9859+4.679 * -0.0297-0.327 * 1.021
=-2.64

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $551 Mil.
Revenue was 1386 + 1330 + 1364 + 1547 = $5,627 Mil.
Gross Profit was 579 + 557 + 585 + 680 = $2,401 Mil.
Total Current Assets was $1,520 Mil.
Total Assets was $4,374 Mil.
Property, Plant and Equipment(Net PPE) was $970 Mil.
Depreciation, Depletion and Amortization(DDA) was $179 Mil.
Selling, General & Admin. Expense(SGA) was $1,285 Mil.
Total Current Liabilities was $1,838 Mil.
Long-Term Debt was $1,595 Mil.
Net Income was 137 + 115 + 136 + 183 = $571 Mil.
Non Operating Income was -10 + 4 + -2 + -11 = $-19 Mil.
Cash Flow from Operations was 220 + 32 + 178 + 290 = $720 Mil.
Accounts Receivable was $562 Mil.
Revenue was 1413 + 1325 + 1338 + 1541 = $5,617 Mil.
Gross Profit was 595 + 563 + 574 + 658 = $2,390 Mil.
Total Current Assets was $1,588 Mil.
Total Assets was $4,523 Mil.
Property, Plant and Equipment(Net PPE) was $1,041 Mil.
Depreciation, Depletion and Amortization(DDA) was $181 Mil.
Selling, General & Admin. Expense(SGA) was $1,301 Mil.
Total Current Liabilities was $1,308 Mil.
Long-Term Debt was $2,169 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)
=(551 / 5627) / (562 / 5617)
=0.09792074 / 0.10005341
=0.9787

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)
=(557 / 5617) / (579 / 5627)
=0.42549404 / 0.42669273
=0.9972

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 - (1520 + 970) / 4374) / (1 - (1588 + 1041) / 4523)
=0.43072702 / 0.41874862
=1.0286

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
=5627 / 5617
=1.0018

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))
=(181 / (181 + 1041)) / (179 / (179 + 970))
=0.14811784 / 0.15578764
=0.9508

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)
=(1285 / 5627) / (1301 / 5617)
=0.22836325 / 0.2316183
=0.9859

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)
=((1595 + 1838) / 4374) / ((2169 + 1308) / 4523)
=0.78486511 / 0.76873756
=1.021

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
=(571 - -19 - 720) / 4374
=-0.0297

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 -2.64 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

Jun04Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13
DSRI 0.95150.84751.00011.01321.00910.93111.1570.97281.32110.9751
GMI 1.0351.01871.02380.97781.04590.95820.97151.01971.03120.9823
AQI 1.01690.93141.05070.98961.20741.00580.86270.9630.98340.9953
SGI 1.04421.05431.05831.04371.08791.03360.96040.99941.04531.0283
DEPI 0.98410.98370.98160.95950.93421.06041.04191.11581.00960.9345
SGAI 0.95180.97111.03590.98910.96860.99881.05331.00790.98990.9929
LVGI 0.85322.11030.89250.94231.15350.960.92761.01160.99480.919
TATA -0.09360.0852-0.0221-0.0586-0.0565-0.0382-0.042-0.0394-0.0186-0.0464
M-score -2.84-2.55-2.47-2.70-2.60-2.69-2.62-2.69-2.22-2.69

Clorox Co Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 1.07981.06861.32111.09770.99040.97160.97510.97960.96810.9787
GMI 1.02341.03091.03121.01071.00430.99540.98230.98830.99660.9972
AQI 1.00080.95570.98340.9030.95190.96410.99531.08631.02441.0286
SGI 1.02931.04461.04531.04381.05521.03851.02831.02691.00871.0018
DEPI 1.07471.02291.00961.04790.98410.9780.93450.90250.94310.9508
SGAI 0.99220.99550.98990.99110.99480.98030.99290.98820.99210.9859
LVGI 1.08841.01830.99480.98650.91050.9110.9190.94670.97071.021
TATA -0.0252-0.0226-0.0186-0.0314-0.0475-0.0464-0.0464-0.0384-0.0189-0.0297
M-score -2.50-2.49-2.22-2.52-2.65-2.68-2.69-2.62-2.58-2.64
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