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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: -3.24   Max: 1.69
Current: -2.51

-3.24
1.69

During the past 13 years, the highest Beneish M-Score of Hormel Foods Corp was 1.69. The lowest was -3.24. 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 * 1.0406+0.528 * 0.9642+0.404 * 0.9468+0.892 * 1.0619+0.115 * 0.9715
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.937+4.679 * -0.0228-0.327 * 0.96
=-2.51

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

This Year (Apr14) TTM:Last Year (Apr13) TTM:
Accounts Receivable was $530 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.
Net Income was 140.09 + 153.348 + 157.34 + 113.635 = $564 Mil.
Non Operating Income was 0 + 4.739 + 20.513 + 0 = $25 Mil.
Cash Flow from Operations was -39.257 + 314.292 + 208.956 + 171.291 = $655 Mil.
Accounts Receivable was $479 Mil.
Revenue was 2152.686 + 2116.241 + 2170.184 + 2008.188 = $8,447 Mil.
Gross Profit was 352.801 + 344.193 + 351.779 + 307.056 = $1,356 Mil.
Total Current Assets was $1,832 Mil.
Total Assets was $4,668 Mil.
Property, Plant and Equipment(Net PPE) was $958 Mil.
Depreciation, Depletion and Amortization(DDA) was $121 Mil.
Selling, General & Admin. Expense(SGA) was $634 Mil.
Total Current Liabilities was $708 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)
=(529.764 / 8970.265) / (479.42 / 8447.299)
=0.05905779 / 0.05675424
=1.0406

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)
=(398.642 / 8447.299) / (378.758 / 8970.265)
=0.16050444 / 0.16646353
=0.9642

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 - (2172.612 + 976.247) / 5085.824) / (1 - (1832.34 + 957.759) / 4667.641)
=0.38085569 / 0.40224645
=0.9468

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
=8970.265 / 8447.299
=1.0619

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))
=(120.948 / (120.948 + 957.759)) / (127.373 / (127.373 + 976.247))
=0.11212313 / 0.11541382
=0.9715

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)
=(630.417 / 8970.265) / (633.604 / 8447.299)
=0.07027853 / 0.0750067
=0.937

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 + 751.994) / 5085.824) / ((250 + 707.894) / 4667.641)
=0.19701704 / 0.20522015
=0.96

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
=(564.413 - 25.252 - 655.282) / 5085.824
=-0.0228

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

Oct04Oct05Oct06Oct07Oct08Oct09Oct10Oct11Oct12Oct13
DSRI 0.82220.97441.07040.99481.02780.93651.06811.01051.03420.9908
GMI 1.02850.11258.65641.0541.01391.33950.98041.01521.04431.0024
AQI 0.8711.01371.02861.06950.94260.95010.9961.00420.91591.3468
SGI 1.1381.13271.06121.07791.09070.96721.10521.09341.04251.0633
DEPI 0.94031.02210.98861.01241.0140.9710.98220.99561.05190.9903
SGAI 0.95260.9931.02190.92480.99360.57920.96580.93470.93950.9738
LVGI 0.93161.01490.92370.97861.04610.89620.9690.89180.93730.9264
TATA -0.0346-0.0641-0.0147-0.01130.0027-0.0616-0.0233-0.0037-0.0039-0.0269
M-score -2.70-3.151.64-2.39-2.39-2.59-2.43-2.35-2.40-2.39

Hormel Foods Corp Quarterly Data

Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14
DSRI 1.05811.06681.03421.06511.0040.99580.99081.01291.04060.9926
GMI 1.07791.06871.04431.00491.00941.00511.00240.9750.96420.9554
AQI 1.10331.0010.91590.90071.28941.26911.34681.34940.94680.9693
SGI 1.05121.03951.04251.03681.04721.05321.06331.06871.06191.0578
DEPI 1.03771.06831.05191.04711.05271.00260.99030.98880.97150.9908
SGAI 0.94540.9230.93950.93880.98471.00730.97380.97950.9370.9348
LVGI 0.78040.92270.93730.93590.93211.03250.92640.99280.960.9138
TATA 0.01050.0069-0.0039-0.0013-0.0136-0.0338-0.0269-0.0564-0.0228-0.008
M-score -2.16-2.27-2.40-2.39-2.35-2.49-2.39-2.54-2.51-2.47
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