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Hormel Foods Corp (NYSE:HRL)
Beneish M-Score
-2.57 (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 Corp has a M-score of -2.57 suggests that the company is not a manipulator.

HRL' s Beneish M-Score Range Over the Past 10 Years
Min: -3.2   Max: -1.99
Current: -2.57

-3.2
-1.99

During the past 13 years, the highest Beneish M-Score of Hormel Foods Corp was -1.99. The lowest was -3.20. And the median was -2.51.


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 Corp 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 * 1.0411+0.528 * 0.8355+0.404 * 1.0276+0.892 * 0.9882+0.115 * 1.0522
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1472+4.679 * -0.0141-0.327 * 0.8793
=-2.57

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

This Year (Jul16) TTM:Last Year (Jul15) TTM:
Accounts Receivable was $565 Mil.
Revenue was 2302.376 + 2300.235 + 2292.672 + 2400.858 = $9,296 Mil.
Gross Profit was 475.285 + 526.359 + 558.011 + 495.03 = $2,055 Mil.
Total Current Assets was $2,010 Mil.
Total Assets was $6,388 Mil.
Property, Plant and Equipment(Net PPE) was $1,053 Mil.
Depreciation, Depletion and Amortization(DDA) was $131 Mil.
Selling, General & Admin. Expense(SGA) was $817 Mil.
Total Current Liabilities was $1,129 Mil.
Long-Term Debt was $250 Mil.
Net Income was 195.654 + 215.397 + 235.061 + 187.231 = $833 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 212.551 + 130.444 + 278.691 + 301.747 = $923 Mil.
Accounts Receivable was $549 Mil.
Revenue was 2188.587 + 2279.345 + 2395.073 + 2543.771 = $9,407 Mil.
Gross Profit was 409.39 + 459.556 + 444.605 + 423.584 = $1,737 Mil.
Total Current Assets was $2,004 Mil.
Total Assets was $6,091 Mil.
Property, Plant and Equipment(Net PPE) was $1,002 Mil.
Depreciation, Depletion and Amortization(DDA) was $132 Mil.
Selling, General & Admin. Expense(SGA) was $721 Mil.
Total Current Liabilities was $1,245 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)
=(564.922 / 9296.141) / (549.056 / 9406.776)
=0.06076952 / 0.05836814
=1.0411

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)
=(1737.135 / 9406.776) / (2054.685 / 9296.141)
=0.18466848 / 0.22102558
=0.8355

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 - (2010.105 + 1052.918) / 6388.297) / (1 - (2003.776 + 1001.81) / 6091.081)
=0.52052589 / 0.50655951
=1.0276

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
=9296.141 / 9406.776
=0.9882

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))
=(131.937 / (131.937 + 1001.81)) / (130.927 / (130.927 + 1052.918))
=0.11637252 / 0.11059471
=1.0522

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)
=(816.92 / 9296.141) / (720.598 / 9406.776)
=0.08787732 / 0.07660414
=1.1472

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 + 1128.727) / 6388.297) / ((250 + 1245.107) / 6091.081)
=0.21582074 / 0.2454584
=0.8793

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
=(833.343 - 0 - 923.433) / 6388.297
=-0.0141

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 Corp has a M-score of -2.57 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 Corp Annual Data

Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14Oct15
DSRI 1.07040.99481.02780.93651.04740.97861.05481.02291.03820.9993
GMI 0.98551.0541.45290.93470.98041.01521.04431.00240.9610.8604
AQI 1.03741.06950.94260.95010.9961.00420.91591.34681.09321.1734
SGI 1.06121.07791.09070.96721.10521.09341.04251.06331.06450.9944
DEPI 0.98861.01241.0140.9710.98220.99561.05190.99031.00590.9861
SGAI 1.02190.92480.54231.06110.96580.93470.93950.97380.97471.1488
LVGI 0.93160.97861.04610.89620.9690.89180.93730.92641.04981.0798
TATA -0.0132-0.00880.0116-0.0638-0.0222-0.0101-0.0039-0.0227-0.0264-0.0498
M-score -2.40-2.38-2.04-2.90-2.44-2.41-2.38-2.34-2.51-2.78

Hormel Foods Corp Quarterly Data

Apr14Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16
DSRI 1.04950.9861.03821.07361.06040.98950.99930.99150.98091.0411
GMI 0.96420.95540.9610.97140.93510.9090.86040.8110.82190.8355
AQI 0.94680.96931.09321.09211.08821.33741.17341.22421.21871.0276
SGI 1.06191.05781.06451.06651.05941.03420.99440.96760.96620.9882
DEPI 0.97150.99081.00590.99740.98051.00120.98611.00511.05581.0522
SGAI 0.9370.93480.97470.97791.03171.10171.14881.20171.19371.1472
LVGI 0.960.91381.04981.00711.01121.23041.07980.98450.97540.8793
TATA -0.0179-0.0028-0.0264-0.0104-0.0456-0.0612-0.0498-0.0455-0.0279-0.0141
M-score -2.48-2.45-2.51-2.38-2.59-2.75-2.78-2.77-2.68-2.57
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