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GuruFocus has detected 6 Warning Signs with Flowers Foods Inc $FLO.
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Flowers Foods Inc (NYSE:FLO)
Beneish M-Score
-2.79 (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 -2.79 suggests that the company is not a manipulator.

FLO' s Beneish M-Score Range Over the Past 10 Years
Min: -3.08   Max: -2.2
Current: -2.79

-3.08
-2.2

During the past 13 years, the highest Beneish M-Score of Flowers Foods Inc was -2.20. The lowest was -3.08. And the median was -2.79.


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 * 0.9702+0.528 * 0.9927+0.404 * 1.0182+0.892 * 1.0393+0.115 * 0.923
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0244+4.679 * -0.066-0.327 * 1.0056
=-2.79

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

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $272 Mil.
Revenue was 868.717 + 918.791 + 935.025 + 1204.352 = $3,927 Mil.
Gross Profit was 418.255 + 442.031 + 457.07 + 583.162 = $1,901 Mil.
Total Current Assets was $477 Mil.
Total Assets was $2,761 Mil.
Property, Plant and Equipment(Net PPE) was $781 Mil.
Depreciation, Depletion and Amortization(DDA) was $141 Mil.
Selling, General & Admin. Expense(SGA) was $1,471 Mil.
Total Current Liabilities was $341 Mil.
Long-Term Debt was $947 Mil.
Net Income was 13.042 + 40.216 + 51.155 + 59.363 = $164 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 61.035 + 91.152 + 73.15 + 120.707 = $346 Mil.
Accounts Receivable was $270 Mil.
Revenue was 858.363 + 885.302 + 888.795 + 1146.045 = $3,779 Mil.
Gross Profit was 402.424 + 421.257 + 431.542 + 560.129 = $1,815 Mil.
Total Current Assets was $538 Mil.
Total Assets was $2,885 Mil.
Property, Plant and Equipment(Net PPE) was $805 Mil.
Depreciation, Depletion and Amortization(DDA) was $132 Mil.
Selling, General & Admin. Expense(SGA) was $1,382 Mil.
Total Current Liabilities was $404 Mil.
Long-Term Debt was $934 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)
=(271.913 / 3926.885) / (269.683 / 3778.505)
=0.06924394 / 0.07137294
=0.9702

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)
=(1815.352 / 3778.505) / (1900.518 / 3926.885)
=0.48044187 / 0.48397598
=0.9927

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 - (476.842 + 781.026) / 2761.068) / (1 - (537.515 + 804.968) / 2885.168)
=0.54442701 / 0.53469503
=1.0182

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
=3926.885 / 3778.505
=1.0393

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))
=(132.175 / (132.175 + 804.968)) / (140.869 / (140.869 + 781.026))
=0.14104037 / 0.15280374
=0.923

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)
=(1470.882 / 3926.885) / (1381.527 / 3778.505)
=0.37456712 / 0.36562794
=1.0244

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)
=((946.667 + 340.624) / 2761.068) / ((933.932 + 403.738) / 2885.168)
=0.46622937 / 0.46363678
=1.0056

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
=(163.776 - 0 - 346.044) / 2761.068
=-0.066

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 -2.79 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 0.96811.09080.93180.94031.03591.25680.8050.92941.13420.9702
GMI 1.0151.02781.02390.97641.01690.99970.98890.98860.99840.9927
AQI 1.06371.30290.99191.01251.02661.28021.13751.03161.12891.0182
SGI 1.07841.18571.0770.98961.07751.09851.23130.99951.00791.0393
DEPI 1.01611.07760.93740.95951.01720.97881.03080.87310.97640.923
SGAI 0.9620.95790.96131.0211.00780.99181.00851.00680.99061.0244
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 -2.91-2.20-2.78-3.08-2.51-2.32-2.51-2.79-2.54-2.79

Flowers Foods Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.92350.92940.97240.99921.05051.13421.071.08571.02460.9702
GMI 0.99480.98860.98960.98740.99410.99841.00271.00461.00080.9927
AQI 1.03651.03161.00861.00111.13811.12891.15341.16061.02811.0182
SGI 1.020.99950.98820.99671.01411.00791.02721.03641.03541.0393
DEPI 0.85410.87310.91020.93640.94430.97640.95790.95160.93710.923
SGAI 0.99811.00681.00541.00081.01010.99060.98850.99731.00181.0244
LVGI 0.92150.88970.92170.90790.98751.06931.17141.17281.0611.0056
TATA -0.034-0.0574-0.0555-0.0705-0.0688-0.0468-0.0495-0.041-0.0519-0.066
M-score -2.67-2.79-2.76-2.80-2.69-2.54-2.62-2.55-2.68-2.79
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