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Hormel Foods Corporation (NYSE:HRL)
Beneish M-Score
-2.53 (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.

Hormel Foods Corporation has a M-score of -2.53 suggests that the company is not a manipulator.

HRL' s 10-Year Beneish M-Score Range
Min: -3.2   Max: -1.99
Current: -2.53

-3.2
-1.99

During the past 13 years, the highest Beneish M-Score of Hormel Foods Corporation was -1.99. The lowest was -3.20. And the median was -2.52.


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 Hormel Foods Corporation 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 * 1.0129+0.528 * 0.975+0.404 * 1.3494+0.892 * 1.0687+0.115 * 0.9888
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9795+4.679 * -0.0554-0.327 * 0.9928
=-2.53

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

This Year (Jan14) TTM:Last Year (Jan13) TTM:
Accounts Receivable was $505 Mil.
Revenue was 2242.672 + 2323.202 + 2159.525 + 2152.686 = $8,878 Mil.
Gross Profit was 398.642 + 385.516 + 330.306 + 352.801 = $1,467 Mil.
Total Current Assets was $2,167 Mil.
Total Assets was $5,067 Mil.
Property, Plant and Equipment(Net PPE) was $968 Mil.
Depreciation, Depletion and Amortization(DDA) was $127 Mil.
Selling, General & Admin. Expense(SGA) was $638 Mil.
Total Current Liabilities was $825 Mil.
Long-Term Debt was $250 Mil.
Net Income was 153.348 + 157.34 + 113.635 + 125.52 = $550 Mil.
Non Operating Income was 0 + 20.513 + 0 + 0 = $21 Mil.
Cash Flow from Operations was 314.292 + 208.956 + 171.291 + 115.745 = $810 Mil.
Accounts Receivable was $467 Mil.
Revenue was 2116.241 + 2170.184 + 2008.188 + 2012.859 = $8,307 Mil.
Gross Profit was 344.193 + 351.779 + 307.056 + 335.607 = $1,339 Mil.
Total Current Assets was $2,400 Mil.
Total Assets was $4,623 Mil.
Property, Plant and Equipment(Net PPE) was $916 Mil.
Depreciation, Depletion and Amortization(DDA) was $119 Mil.
Selling, General & Admin. Expense(SGA) was $609 Mil.
Total Current Liabilities was $737 Mil.
Long-Term Debt was $250 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)
=(505.024 / 8878.085) / (466.536 / 8307.472)
=0.05688434 / 0.0561586
=1.0129

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)
=(385.516 / 8307.472) / (398.642 / 8878.085)
=0.16113626 / 0.16526819
=0.975

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 - (2166.833 + 967.521) / 5067.17) / (1 - (2399.845 + 916.194) / 4622.83)
=0.38143895 / 0.28268204
=1.3494

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
=8878.085 / 8307.472
=1.0687

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))
=(118.523 / (118.523 + 916.194)) / (126.766 / (126.766 + 967.521))
=0.1145463 / 0.11584347
=0.9888

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)
=(637.698 / 8878.085) / (609.222 / 8307.472)
=0.07182833 / 0.07333422
=0.9795

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)
=((250 + 824.525) / 5067.17) / ((250 + 737.386) / 4622.83)
=0.21205624 / 0.21358908
=0.9928

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
=(549.843 - 20.513 - 810.284) / 5067.17
=-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.

Hormel Foods Corporation has a M-score of -2.53 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.

Hormel Foods Corporation Annual Data

Oct04Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13
DSRI 0.82220.97441.07040.99481.02780.93651.06811.01051.03420.9908
GMI 1.02570.99120.98551.0541.45290.93470.98041.01521.04431.0024
AQI 0.8711.00511.03741.06950.94260.95010.9961.00420.91591.3468
SGI 1.1381.13271.06121.07791.09070.96721.10521.09341.04251.0633
DEPI 0.94031.02210.98861.01241.0140.9710.98220.99561.05190.9903
SGAI 0.95260.9931.02190.92480.54231.06110.96580.93470.93950.9738
LVGI 0.93161.00630.93160.97861.04610.89620.9690.89180.93730.9264
TATA -0.0325-0.0719-0.0147-0.00990.0116-0.0638-0.0222-0.0038-0.0124-0.0269
M-score -2.69-2.72-2.40-2.38-2.04-2.90-2.43-2.35-2.44-2.39

Hormel Foods Corporation Quarterly Data

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
DSRI 1.01050.96141.05811.06681.03421.06511.0040.99580.99081.0129
GMI 1.01521.0781.07791.06871.04431.00491.00941.00511.00240.975
AQI 1.00421.02861.10331.0010.91590.90071.28941.26911.34681.3494
SGI 1.09341.08071.05121.03951.04251.03681.04721.05321.06331.0687
DEPI 0.99561.00811.03771.06831.05191.04711.05271.00260.99030.9888
SGAI 0.93470.95740.94540.9230.93950.93880.98471.00730.97380.9795
LVGI 0.89180.92230.78040.92270.93730.93590.93211.03250.92640.9928
TATA -0.0038-0.00550.01030.0068-0.0124-0.0097-0.0219-0.042-0.0269-0.0554
M-score -2.35-2.38-2.16-2.27-2.44-2.43-2.38-2.53-2.39-2.53
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