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Clorox Co (NYSE:CLX)
Beneish M-Score
-2.78 (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 -2.78 suggests that the company is not a manipulator.

CLX' s 10-Year Beneish M-Score Range
Min: -3.7   Max: -2.15
Current: -2.78

-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 * 0.94+0.528 * 1.0164+0.404 * 0.9972+0.892 * 1.0194+0.115 * 0.9629
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9933+4.679 * -0.0624-0.327 * 0.933
=-2.78

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $528 Mil.
Revenue was 1401 + 1345 + 1352 + 1574 = $5,672 Mil.
Gross Profit was 605 + 572 + 578 + 646 = $2,401 Mil.
Total Current Assets was $1,495 Mil.
Total Assets was $4,228 Mil.
Property, Plant and Equipment(Net PPE) was $917 Mil.
Depreciation, Depletion and Amortization(DDA) was $175 Mil.
Selling, General & Admin. Expense(SGA) was $1,288 Mil.
Total Current Liabilities was $1,300 Mil.
Long-Term Debt was $1,796 Mil.
Net Income was 174 + 125 + 90 + 170 = $559 Mil.
Non Operating Income was 1 + 2 + -3 + -9 = $-9 Mil.
Cash Flow from Operations was 218 + 34 + 243 + 337 = $832 Mil.
Accounts Receivable was $551 Mil.
Revenue was 1366 + 1308 + 1343 + 1547 = $5,564 Mil.
Gross Profit was 575 + 555 + 584 + 680 = $2,394 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 $177 Mil.
Selling, General & Admin. Expense(SGA) was $1,272 Mil.
Total Current Liabilities was $1,838 Mil.
Long-Term Debt was $1,595 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)
=(528 / 5672) / (551 / 5564)
=0.09308886 / 0.09902948
=0.94

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)
=(572 / 5564) / (605 / 5672)
=0.430266 / 0.42330748
=1.0164

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 - (1495 + 917) / 4228) / (1 - (1520 + 970) / 4374)
=0.4295175 / 0.43072702
=0.9972

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
=5672 / 5564
=1.0194

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))
=(177 / (177 + 970)) / (175 / (175 + 917))
=0.15431561 / 0.16025641
=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)
=(1288 / 5672) / (1272 / 5564)
=0.22708039 / 0.22861251
=0.9933

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)
=((1796 + 1300) / 4228) / ((1595 + 1838) / 4374)
=0.73226112 / 0.78486511
=0.933

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
=(559 - -9 - 832) / 4228
=-0.0624

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 -2.78 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

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 0.99040.97160.77790.98330.97550.98980.94680.90370.94350.94
GMI 1.00430.99540.98230.98510.99030.98891.01621.02381.02291.0164
AQI 0.95190.96410.99531.08631.02441.02861.02111.02420.90910.9972
SGI 1.05521.03851.02831.02311.00110.99060.99430.9951.00461.0194
DEPI 0.98410.9780.93450.90670.94760.95980.97240.95390.96320.9629
SGAI 0.99480.98030.99290.98880.99280.9870.97650.9680.96020.9933
LVGI 0.91050.9110.9190.94670.97071.0210.99070.97090.99150.933
TATA -0.0475-0.0464-0.0464-0.0384-0.0189-0.0325-0.0479-0.0757-0.065-0.0624
M-score -2.65-2.68-2.87-2.62-2.58-2.65-2.74-2.90-2.85-2.78
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