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Clorox Co (NYSE:CLX)
Beneish M-Score
-2.90 (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 -2.90 suggests that the company is not a manipulator.

CLX' s 10-Year Beneish M-Score Range
Min: -3.7   Max: -2.15
Current: -2.9

-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 * 0.9105+0.528 * 1.017+0.404 * 1.0242+0.892 * 0.9876+0.115 * 0.9629
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9692+4.679 * -0.0757-0.327 * 0.9709
=-2.90

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $455 Mil.
Revenue was 1352 + 1511 + 1386 + 1330 = $5,579 Mil.
Gross Profit was 578 + 639 + 579 + 557 = $2,353 Mil.
Total Current Assets was $1,351 Mil.
Total Assets was $4,150 Mil.
Property, Plant and Equipment(Net PPE) was $947 Mil.
Depreciation, Depletion and Amortization(DDA) was $179 Mil.
Selling, General & Admin. Expense(SGA) was $1,252 Mil.
Total Current Liabilities was $1,533 Mil.
Long-Term Debt was $1,596 Mil.
Net Income was 90 + 170 + 137 + 115 = $512 Mil.
Non Operating Income was -3 + 3 + -10 + 4 = $-6 Mil.
Cash Flow from Operations was 243 + 337 + 220 + 32 = $832 Mil.
Accounts Receivable was $506 Mil.
Revenue was 1364 + 1547 + 1413 + 1325 = $5,649 Mil.
Gross Profit was 585 + 680 + 595 + 563 = $2,423 Mil.
Total Current Assets was $1,420 Mil.
Total Assets was $4,301 Mil.
Property, Plant and Equipment(Net PPE) was $1,007 Mil.
Depreciation, Depletion and Amortization(DDA) was $182 Mil.
Selling, General & Admin. Expense(SGA) was $1,308 Mil.
Total Current Liabilities was $1,170 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)
=(455 / 5579) / (506 / 5649)
=0.08155583 / 0.08957338
=0.9105

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)
=(639 / 5649) / (578 / 5579)
=0.42892547 / 0.42176017
=1.017

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 - (1351 + 947) / 4150) / (1 - (1420 + 1007) / 4301)
=0.44626506 / 0.43571262
=1.0242

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
=5579 / 5649
=0.9876

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))
=(182 / (182 + 1007)) / (179 / (179 + 947))
=0.15306981 / 0.1589698
=0.9629

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)
=(1252 / 5579) / (1308 / 5649)
=0.22441298 / 0.23154541
=0.9692

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)
=((1596 + 1533) / 4150) / ((2170 + 1170) / 4301)
=0.7539759 / 0.77656359
=0.9709

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
=(512 - -6 - 832) / 4150
=-0.0757

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 -2.90 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 0.84751.00011.01321.00910.93111.10241.0211.04961.22740.7553
GMI 1.01871.02380.97781.04590.95820.96171.03011.03120.98231.0162
AQI 0.93141.05070.98961.20741.00581.00910.82330.98340.99531.0211
SGI 1.05431.05831.04371.08791.03361.01540.94521.04531.02830.9943
DEPI 0.98370.98160.95950.93421.06041.04411.11351.00960.93450.9724
SGAI 0.97111.03590.98910.96860.99881.02621.03450.98990.99290.9765
LVGI 2.11030.89250.94231.15350.960.92671.01260.99480.9190.9907
TATA 0.0852-0.0221-0.0586-0.0565-0.0374-0.0419-0.0404-0.0193-0.0464-0.0479
M-score -2.55-2.47-2.70-2.60-2.69-2.56-2.75-2.47-2.45-2.91

Clorox Co Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.04961.09770.99040.97161.22740.97960.96810.97870.75530.9105
GMI 1.03121.01071.00430.99540.98230.98830.99660.99721.01621.017
AQI 0.98340.9030.95190.96410.99531.08631.02441.02861.02111.0242
SGI 1.04531.04381.05521.03851.02831.02691.00871.00180.99430.9876
DEPI 1.00961.04790.98410.9780.93450.90250.94310.95080.97240.9629
SGAI 0.98990.99110.99480.98030.99290.98820.99210.98590.97650.9692
LVGI 0.99480.98650.91050.9110.9190.94670.97071.0210.99070.9709
TATA -0.0193-0.032-0.0482-0.0471-0.0464-0.0384-0.0189-0.0297-0.0479-0.0757
M-score -2.47-2.52-2.65-2.68-2.45-2.62-2.58-2.64-2.91-2.90
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