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Hormel Foods Corp (NYSE:HRL)
Beneish M-Score
-2.51 (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 -2.51 suggests that the company is not a manipulator.

HRL' s 10-Year Beneish M-Score Range
Min: -3.02   Max: -1.99
Current: -2.51

-3.02
-1.99

During the past 13 years, the highest Beneish M-Score of Hormel Foods Corp was -1.99. The lowest was -3.02. And the median was -2.48.


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 * 1.0382+0.528 * 0.961+0.404 * 1.0932+0.892 * 1.0645+0.115 * 1.0059
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9747+4.679 * -0.0264-0.327 * 1.0498
=-2.51

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

This Year (Oct14) TTM:Last Year (Oct13) TTM:
Accounts Receivable was $610 Mil.
Revenue was 2543.771 + 2284.947 + 2244.866 + 2242.672 = $9,316 Mil.
Gross Profit was 423.584 + 363.999 + 378.758 + 398.642 = $1,565 Mil.
Total Current Assets was $2,133 Mil.
Total Assets was $5,456 Mil.
Property, Plant and Equipment(Net PPE) was $1,002 Mil.
Depreciation, Depletion and Amortization(DDA) was $130 Mil.
Selling, General & Admin. Expense(SGA) was $651 Mil.
Total Current Liabilities was $955 Mil.
Long-Term Debt was $250 Mil.
Net Income was 171.264 + 137.975 + 140.09 + 153.348 = $603 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 352.513 + 119.331 + -39.257 + 314.292 = $747 Mil.
Accounts Receivable was $552 Mil.
Revenue was 2323.202 + 2159.525 + 2152.686 + 2116.241 = $8,752 Mil.
Gross Profit was 385.516 + 330.306 + 352.801 + 344.193 = $1,413 Mil.
Total Current Assets was $2,047 Mil.
Total Assets was $4,916 Mil.
Property, Plant and Equipment(Net PPE) was $955 Mil.
Depreciation, Depletion and Amortization(DDA) was $125 Mil.
Selling, General & Admin. Expense(SGA) was $627 Mil.
Total Current Liabilities was $784 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)
=(609.526 / 9316.256) / (551.5 / 8751.654)
=0.06542607 / 0.06301666
=1.0382

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)
=(363.999 / 8751.654) / (423.584 / 9316.256)
=0.16143417 / 0.16798411
=0.961

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 - (2132.771 + 1001.767) / 5455.619) / (1 - (2047.413 + 955.333) / 4915.88)
=0.42544778 / 0.38917427
=1.0932

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
=9316.256 / 8751.654
=1.0645

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))
=(124.85 / (124.85 + 955.333)) / (130.044 / (130.044 + 1001.767))
=0.11558227 / 0.11489904
=1.0059

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)
=(650.948 / 9316.256) / (627.34 / 8751.654)
=0.06987227 / 0.07168245
=0.9747

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 + 954.692) / 5455.619) / ((250 + 784.009) / 4915.88)
=0.22081674 / 0.21034057
=1.0498

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
=(602.677 - 0 - 746.879) / 5455.619
=-0.0264

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 -2.51 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

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
DSRI 1.06651.05481.06511.00471.02951.02291.01291.04950.9861.0382
GMI 1.06871.04431.00491.00941.00511.00240.9750.96420.95540.961
AQI 1.0010.91590.90071.28941.26911.34681.34940.94680.96931.0932
SGI 1.03951.04251.03681.04721.05321.06331.06871.06191.05781.0645
DEPI 1.06831.05191.04711.05271.00260.99030.98880.97150.99081.0059
SGAI 0.9230.93950.93880.98471.00730.97380.97950.9370.93480.9747
LVGI 0.92270.93730.93590.93211.03250.92640.99280.960.91381.0498
TATA 0.0068-0.0124-0.0097-0.0219-0.042-0.0227-0.0514-0.0179-0.0028-0.0264
M-score -2.27-2.42-2.43-2.38-2.50-2.34-2.51-2.48-2.45-2.51
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