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Hormel Foods Corp (NYSE:HRL)
Beneish M-Score
-2.77 (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 -2.77 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: -2.77

-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 * 0.9915+0.528 * 0.811+0.404 * 1.2242+0.892 * 0.9676+0.115 * 1.0051
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.2017+4.679 * -0.0455-0.327 * 0.9845
=-2.77

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

This Year (Jan16) TTM:Last Year (Jan15) TTM:
Accounts Receivable was $555 Mil.
Revenue was 2292.672 + 2400.858 + 2188.587 + 2279.345 = $9,161 Mil.
Gross Profit was 558.011 + 495.03 + 409.39 + 459.556 = $1,922 Mil.
Total Current Assets was $1,946 Mil.
Total Assets was $6,041 Mil.
Property, Plant and Equipment(Net PPE) was $1,014 Mil.
Depreciation, Depletion and Amortization(DDA) was $132 Mil.
Selling, General & Admin. Expense(SGA) was $773 Mil.
Total Current Liabilities was $1,020 Mil.
Long-Term Debt was $250 Mil.
Net Income was 235.061 + 187.231 + 146.938 + 180.201 = $749 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 278.691 + 301.747 + 244.508 + 199.235 = $1,024 Mil.
Accounts Receivable was $578 Mil.
Revenue was 2395.073 + 2543.771 + 2284.947 + 2244.866 = $9,469 Mil.
Gross Profit was 444.605 + 423.584 + 363.999 + 378.758 = $1,611 Mil.
Total Current Assets was $2,246 Mil.
Total Assets was $5,560 Mil.
Property, Plant and Equipment(Net PPE) was $997 Mil.
Depreciation, Depletion and Amortization(DDA) was $131 Mil.
Selling, General & Admin. Expense(SGA) was $665 Mil.
Total Current Liabilities was $937 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)
=(554.738 / 9161.462) / (578.238 / 9468.657)
=0.06055125 / 0.06106864
=0.9915

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)
=(495.03 / 9468.657) / (558.011 / 9161.462)
=0.17013458 / 0.20979042
=0.811

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 - (1946.083 + 1014.003) / 6040.889) / (1 - (2246.331 + 997.237) / 5559.623)
=0.50999166 / 0.4165849
=1.2242

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
=9161.462 / 9468.657
=0.9676

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))
=(131.043 / (131.043 + 997.237)) / (132.479 / (132.479 + 1014.003))
=0.11614404 / 0.11555262
=1.0051

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)
=(773.26 / 9161.462) / (665.058 / 9468.657)
=0.08440356 / 0.07023784
=1.2017

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 + 1020.098) / 6040.889) / ((250 + 937.304) / 5559.623)
=0.21025018 / 0.21355837
=0.9845

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
=(749.431 - 0 - 1024.181) / 6040.889
=-0.0455

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 -2.77 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

Oct13Jan14Apr14Jul14Oct14Jan15Apr15Jul15Oct15Jan16
DSRI 1.02291.01291.04950.9861.03821.07361.06040.98950.99930.9915
GMI 1.00240.9750.96420.95540.9610.97140.93510.9090.86040.811
AQI 1.34681.34940.94680.96931.09321.09211.08821.33741.17341.2242
SGI 1.06331.06871.06191.05781.06451.06651.05941.03420.99440.9676
DEPI 0.99030.98880.97150.99081.00590.99740.98051.00120.98611.0051
SGAI 0.97380.97950.9370.93480.97470.97791.03171.10171.14881.2017
LVGI 0.92640.99280.960.91381.04981.00711.01121.23041.07980.9845
TATA -0.0227-0.0514-0.0179-0.0028-0.0264-0.0104-0.0456-0.0612-0.0498-0.0455
M-score -2.34-2.51-2.48-2.45-2.51-2.38-2.59-2.75-2.78-2.77
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