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Hormel Foods Corp (NYSE:HRL)
Beneish M-Score
-2.38 (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 -2.38 suggests that the company is not a manipulator.

HRL' s 10-Year Beneish M-Score Range
Min: -3.2   Max: -1.99
Current: -2.38

-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 * 1.0736+0.528 * 0.9714+0.404 * 1.0921+0.892 * 1.0665+0.115 * 0.9974
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9779+4.679 * -0.0104-0.327 * 1.0071
=-2.38

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

This Year (Jan15) TTM:Last Year (Jan14) TTM:
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.
Net Income was 171.718 + 171.264 + 137.975 + 140.09 = $621 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 246.502 + 352.513 + 119.331 + -39.257 = $679 Mil.
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.



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)
=(578.238 / 9468.657) / (505.024 / 8878.085)
=0.06106864 / 0.05688434
=1.0736

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)
=(423.584 / 8878.085) / (444.605 / 9468.657)
=0.16526819 / 0.17013458
=0.9714

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 - (2246.331 + 997.237) / 5559.623) / (1 - (2166.833 + 967.521) / 5067.17)
=0.4165849 / 0.38143895
=1.0921

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
=9468.657 / 8878.085
=1.0665

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))
=(126.766 / (126.766 + 967.521)) / (131.043 / (131.043 + 997.237))
=0.11584347 / 0.11614404
=0.9974

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)
=(665.058 / 9468.657) / (637.698 / 8878.085)
=0.07023784 / 0.07182833
=0.9779

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 + 937.304) / 5559.623) / ((250 + 824.525) / 5067.17)
=0.21355837 / 0.21205624
=1.0071

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
=(621.047 - 0 - 679.089) / 5559.623
=-0.0104

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 -2.38 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

Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15
DSRI 1.05481.06511.00471.02951.02291.01291.04950.9861.03821.0736
GMI 1.04431.00491.00941.00511.00240.9750.96420.95540.9610.9714
AQI 0.91590.90071.28941.26911.34681.34940.94680.96931.09321.0921
SGI 1.04251.03681.04721.05321.06331.06871.06191.05781.06451.0665
DEPI 1.05191.04711.05271.00260.99030.98880.97150.99081.00590.9974
SGAI 0.93950.93880.98471.00730.97380.97950.9370.93480.97470.9779
LVGI 0.93730.93590.93211.03250.92640.99280.960.91381.04981.0071
TATA -0.0124-0.0097-0.0219-0.042-0.0227-0.0514-0.0179-0.0028-0.0264-0.0104
M-score -2.42-2.43-2.38-2.50-2.34-2.51-2.48-2.45-2.51-2.38
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