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Hormel Foods Corp (NYSE:HRL)
Beneish M-Score
-2.59 (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 -2.59 suggests that the company is not a manipulator.

HRL' s 10-Year Beneish M-Score Range
Min: -3.2   Max: -1.99
Current: -2.59

-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 -2.50.


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 * 1.0604+0.528 * 0.9351+0.404 * 1.0882+0.892 * 1.0594+0.115 * 0.9805
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0317+4.679 * -0.0456-0.327 * 1.0112
=-2.59

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

This Year (Apr15) TTM:Last Year (Apr14) TTM:
Accounts Receivable was $579 Mil.
Revenue was 2279.345 + 2395.073 + 2543.771 + 2284.947 = $9,503 Mil.
Gross Profit was 459.556 + 444.605 + 423.584 + 363.999 = $1,692 Mil.
Total Current Assets was $2,302 Mil.
Total Assets was $5,623 Mil.
Property, Plant and Equipment(Net PPE) was $990 Mil.
Depreciation, Depletion and Amortization(DDA) was $132 Mil.
Selling, General & Admin. Expense(SGA) was $689 Mil.
Total Current Liabilities was $870 Mil.
Long-Term Debt was $250 Mil.
Net Income was 180.201 + 171.718 + 171.264 + 137.975 = $661 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 199.235 + 246.502 + 352.513 + 119.331 = $918 Mil.
Accounts Receivable was $515 Mil.
Revenue was 2244.866 + 2242.672 + 2323.202 + 2159.525 = $8,970 Mil.
Gross Profit was 378.758 + 398.642 + 385.516 + 330.306 = $1,493 Mil.
Total Current Assets was $2,173 Mil.
Total Assets was $5,086 Mil.
Property, Plant and Equipment(Net PPE) was $976 Mil.
Depreciation, Depletion and Amortization(DDA) was $127 Mil.
Selling, General & Admin. Expense(SGA) was $630 Mil.
Total Current Liabilities was $752 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)
=(578.726 / 9503.136) / (515.161 / 8970.265)
=0.06089842 / 0.05742985
=1.0604

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)
=(444.605 / 8970.265) / (459.556 / 9503.136)
=0.16646353 / 0.17801955
=0.9351

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 - (2302.431 + 990.068) / 5622.998) / (1 - (2172.612 + 976.247) / 5085.824)
=0.41445844 / 0.38085569
=1.0882

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
=9503.136 / 8970.265
=1.0594

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))
=(127.373 / (127.373 + 976.247)) / (132.087 / (132.087 + 990.068))
=0.11541382 / 0.11770834
=0.9805

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)
=(689.006 / 9503.136) / (630.417 / 8970.265)
=0.07250301 / 0.07027853
=1.0317

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 + 870.182) / 5622.998) / ((250 + 751.994) / 5085.824)
=0.19921437 / 0.19701704
=1.0112

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
=(661.158 - 0 - 917.581) / 5622.998
=-0.0456

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 -2.59 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

Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13Oct14
DSRI 0.97441.07040.99481.02780.93651.04740.97861.05481.02291.0382
GMI 0.99120.98551.0541.45290.93470.98041.01521.04431.00240.961
AQI 1.00511.03741.06950.94260.95010.9961.00420.91591.34681.0932
SGI 1.13271.06121.07791.09070.96721.10521.09341.04251.06331.0645
DEPI 1.02210.98861.01241.0140.9710.98220.99561.05190.99031.0059
SGAI 0.9931.02190.92480.54231.06110.96580.93470.93950.97380.9747
LVGI 1.00630.93160.97861.04610.89620.9690.89180.93730.92641.0498
TATA -0.0719-0.0147-0.00990.0116-0.0638-0.0222-0.0038-0.0124-0.0227-0.0264
M-score -2.72-2.40-2.38-2.04-2.90-2.44-2.38-2.42-2.34-2.51

Hormel Foods Corp Quarterly Data

Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15Apr15
DSRI 1.06511.00471.02951.02291.01291.04950.9861.03821.07361.0604
GMI 1.00491.00941.00511.00240.9750.96420.95540.9610.97140.9351
AQI 0.90071.28941.26911.34681.34940.94680.96931.09321.09211.0882
SGI 1.03681.04721.05321.06331.06871.06191.05781.06451.06651.0594
DEPI 1.04711.05271.00260.99030.98880.97150.99081.00590.99740.9805
SGAI 0.93880.98471.00730.97380.97950.9370.93480.97470.97791.0317
LVGI 0.93590.93211.03250.92640.99280.960.91381.04981.00711.0112
TATA -0.0097-0.0219-0.042-0.0227-0.0514-0.0179-0.0028-0.0264-0.0104-0.0456
M-score -2.43-2.38-2.50-2.34-2.51-2.48-2.45-2.51-2.38-2.59
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