Switch to:
Herbalife Ltd (NYSE:HLF)
Beneish M-Score
-3.11 (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.

Herbalife Ltd has a M-score of -3.11 suggests that the company is not a manipulator.

HLF' s Beneish M-Score Range Over the Past 10 Years
Min: -3.35   Max: -2.28
Current: -3.11

-3.35
-2.28

During the past 13 years, the highest Beneish M-Score of Herbalife Ltd was -2.28. The lowest was -3.35. And the median was -2.76.


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 Herbalife Ltd 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 * 0.9697+0.528 * 0.9958+0.404 * 0.9616+0.892 * 1.0083+0.115 * 1.081
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 3.2001+4.679 * -0.0554-0.327 * 0.8978
=-3.11

* 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 $88 Mil.
Revenue was 1122 + 1201.8 + 1119.6 + 1098.4 = $4,542 Mil.
Gross Profit was 912.9 + 965.5 + 906.5 + 894 = $3,679 Mil.
Total Current Assets was $1,559 Mil.
Total Assets was $2,533 Mil.
Property, Plant and Equipment(Net PPE) was $376 Mil.
Depreciation, Depletion and Amortization(DDA) was $98 Mil.
Selling, General & Admin. Expense(SGA) was $1,987 Mil.
Total Current Liabilities was $1,263 Mil.
Long-Term Debt was $1,018 Mil.
Net Income was 87.7 + -22.9 + 95.8 + 84.5 = $245 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was -118.1 + 226.9 + 141.1 + 135.5 = $385 Mil.
Accounts Receivable was $90 Mil.
Revenue was 1102.9 + 1162.3 + 1105.4 + 1133.6 = $4,504 Mil.
Gross Profit was 896 + 933 + 890 + 914 = $3,633 Mil.
Total Current Assets was $1,492 Mil.
Total Assets was $2,422 Mil.
Property, Plant and Equipment(Net PPE) was $336 Mil.
Depreciation, Depletion and Amortization(DDA) was $97 Mil.
Selling, General & Admin. Expense(SGA) was $616 Mil.
Total Current Liabilities was $1,031 Mil.
Long-Term Debt was $1,399 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)
=(87.9 / 4541.8) / (89.9 / 4504.2)
=0.01935356 / 0.01995915
=0.9697

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)
=(3633 / 4504.2) / (3678.9 / 4541.8)
=0.80658052 / 0.81000925
=0.9958

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 - (1559.4 + 376.2) / 2532.6) / (1 - (1492.1 + 335.8) / 2421.5)
=0.23572613 / 0.24513731
=0.9616

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
=4541.8 / 4504.2
=1.0083

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))
=(96.6 / (96.6 + 335.8)) / (98 / (98 + 376.2))
=0.22340426 / 0.20666385
=1.081

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)
=(1987.4 / 4541.8) / (615.9 / 4504.2)
=0.43757981 / 0.13673904
=3.2001

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)
=((1017.6 + 1263.3) / 2532.6) / ((1398.7 + 1030.5) / 2421.5)
=0.90061597 / 1.00317985
=0.8978

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
=(245.1 - 0 - 385.4) / 2532.6
=-0.0554

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.

Herbalife Ltd has a M-score of -3.11 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.

Herbalife Ltd Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.15410.9971.08411.11570.94580.82891.09880.72890.81110.9277
GMI 1.00021.00320.98761.02260.99020.99061.00331.00010.99820.9917
AQI 0.79370.95950.95580.96460.93960.88710.87230.71731.22120.9145
SGI 1.20351.13811.09940.98531.17621.26341.17881.18491.02760.9013
DEPI 1.61770.99471.03480.8370.93111.03071.15391.11741.03560.9041
SGAI 1.00510.98151.02320.50070.97510.95820.99441.09141.18940.9908
LVGI 0.76971.39350.95480.8850.89941.01931.29591.03491.52120.895
TATA -0.0406-0.0744-0.0462-0.0713-0.0771-0.0653-0.0602-0.0992-0.0806-0.1159
M-score -2.28-2.85-2.54-2.62-2.73-2.75-2.64-3.16-3.12-3.19

Herbalife Ltd Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 0.81950.82970.81110.75661.00841.0110.92771.10921.00420.9697
GMI 0.99650.99920.99820.99770.99960.99270.99170.99150.99130.9958
AQI 1.08041.13461.22121.2581.05981.01920.91450.95070.88440.9616
SGI 1.14311.10361.02760.96720.92210.88420.90130.93370.97111.0083
DEPI 1.23391.16441.03560.93880.89110.90280.90410.92811.04171.081
SGAI 1.36541.67290.96130.90050.56520.25031.22591.23411.76253.2001
LVGI 1.47461.51021.52121.15070.93360.89310.8950.85980.91430.8978
TATA -0.1257-0.1284-0.0806-0.066-0.0973-0.0805-0.1159-0.1056-0.1481-0.0554
M-score -3.27-3.35-3.08-2.98-2.89-2.79-3.23-2.96-3.34-3.11
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK