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GuruFocus has detected 5 Warning Signs with Flowers Foods Inc $FLO.
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Flowers Foods Inc (NYSE:FLO)
Beneish M-Score
-3.68 (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.

Flowers Foods Inc has a M-score of -2.68 suggests that the company is not a manipulator.

FLO' s Beneish M-Score Range Over the Past 10 Years
Min: -3.68   Max: -2.2
Current: -3.68

-3.68
-2.2

During the past 13 years, the highest Beneish M-Score of Flowers Foods Inc was -2.20. The lowest was -3.68. And the median was -2.70.


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 Flowers Foods Inc 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 * 1.0287+0.528 * 1.005+0.404 * 1.0281+0.892 * 1.0314+0.115 * 0.9371
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9952+4.679 * -0.0519-0.327 * 1.061
=-2.68

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $284 Mil.
Revenue was 918.791 + 935.025 + 1204.352 + 858.363 = $3,917 Mil.
Gross Profit was 442.031 + 457.07 + 583.162 + 402.424 = $1,885 Mil.
Total Current Assets was $494 Mil.
Total Assets was $2,810 Mil.
Property, Plant and Equipment(Net PPE) was $789 Mil.
Depreciation, Depletion and Amortization(DDA) was $141 Mil.
Selling, General & Admin. Expense(SGA) was $1,448 Mil.
Total Current Liabilities was $347 Mil.
Long-Term Debt was $980 Mil.
Net Income was 40.216 + 51.155 + 59.363 + 32.246 = $183 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 91.152 + 73.15 + 120.707 + 43.691 = $329 Mil.
Accounts Receivable was $268 Mil.
Revenue was 885.302 + 888.795 + 1146.045 + 877.333 = $3,797 Mil.
Gross Profit was 421.257 + 431.542 + 560.129 + 423.574 = $1,837 Mil.
Total Current Assets was $513 Mil.
Total Assets was $2,752 Mil.
Property, Plant and Equipment(Net PPE) was $785 Mil.
Depreciation, Depletion and Amortization(DDA) was $130 Mil.
Selling, General & Admin. Expense(SGA) was $1,411 Mil.
Total Current Liabilities was $382 Mil.
Long-Term Debt was $844 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)
=(284.071 / 3916.531) / (267.762 / 3797.475)
=0.07253128 / 0.07051054
=1.0287

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)
=(1836.502 / 3797.475) / (1884.687 / 3916.531)
=0.48361135 / 0.48121335
=1.005

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 - (494.145 + 789.08) / 2809.615) / (1 - (513.277 + 784.612) / 2752.243)
=0.54327372 / 0.528425
=1.0281

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
=3916.531 / 3797.475
=1.0314

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))
=(129.979 / (129.979 + 784.612)) / (141.066 / (141.066 + 789.08))
=0.14211708 / 0.15166006
=0.9371

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)
=(1447.854 / 3916.531) / (1410.667 / 3797.475)
=0.36967766 / 0.37147499
=0.9952

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)
=((980.177 + 347.213) / 2809.615) / ((843.643 + 381.922) / 2752.243)
=0.47244551 / 0.4452968
=1.061

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
=(182.98 - 0 - 328.7) / 2809.615
=-0.0519

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.

Flowers Foods Inc has a M-score of -2.68 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.

Flowers Foods Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.96811.09080.93180.94031.03591.26320.80490.92491.13420
GMI 1.0151.02781.02390.97641.01691.00540.98860.98320.99840.9927
AQI 1.06371.30290.99191.01251.02661.28021.13751.03161.12891.0325
SGI 1.07841.18571.0770.98961.07751.09291.23141.00441.00791.0393
DEPI 1.01611.07760.93740.95951.01720.97881.03080.87310.97640.923
SGAI 0.9620.95790.96131.0211.00780.9831.00881.01540.99061.0244
LVGI 0.82011.63450.84750.77811.37771.25571.09290.88971.06931.0056
TATA -0.12150.018-0.0782-0.1275-0.007-0.0405-0.0158-0.0574-0.0468-0.066
M-score -2.91-2.20-2.78-3.08-2.51-2.31-2.51-2.79-2.54-3.68

Flowers Foods Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.92790.92490.96460.98881.03711.13421.07171.08871.02870
GMI 10.98320.98090.97610.98020.99841.00441.00761.0050.9927
AQI 1.03651.03161.00861.00111.13811.12891.15341.16061.02811.0325
SGI 1.01521.00440.99611.00721.02721.00791.02561.03351.03141.0393
DEPI 0.85410.87310.91020.93640.94430.97640.95790.95160.93710.923
SGAI 0.98971.01541.01941.01911.0330.99060.98590.99250.99521.0244
LVGI 0.92150.88970.92170.90790.98751.06931.17141.17281.0611.0056
TATA -0.034-0.0574-0.0555-0.0705-0.0688-0.0468-0.0495-0.041-0.0519-0.0666
M-score -2.67-2.79-2.77-2.81-2.71-2.54-2.62-2.55-2.68-3.68
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