Switch to:
Hormel Foods Corp (NYSE:HRL)
Beneish M-Score
-2.47 (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 -2.47 suggests that the company is not a manipulator.

HRL' s 10-Year Beneish M-Score Range
Min: -3.2   Max: -1.99
Current: -2.47

-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 -2.53.


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 * 0.986+0.528 * 0.9554+0.404 * 0.9693+0.892 * 1.0578+0.115 * 0.9908
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9348+4.679 * -0.0068-0.327 * 0.9138
=-2.47

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

This Year (Jul14) TTM:Last Year (Jul13) TTM:
Accounts Receivable was $537 Mil.
Revenue was 2284.947 + 2244.866 + 2242.672 + 2323.202 = $9,096 Mil.
Gross Profit was 363.999 + 378.758 + 398.642 + 385.516 = $1,527 Mil.
Total Current Assets was $2,245 Mil.
Total Assets was $5,188 Mil.
Property, Plant and Equipment(Net PPE) was $978 Mil.
Depreciation, Depletion and Amortization(DDA) was $129 Mil.
Selling, General & Admin. Expense(SGA) was $632 Mil.
Total Current Liabilities was $785 Mil.
Long-Term Debt was $250 Mil.
Net Income was 137.975 + 140.09 + 153.348 + 157.34 = $589 Mil.
Non Operating Income was 0 + 0 + 0 + 20.513 = $21 Mil.
Cash Flow from Operations was 119.331 + -39.257 + 314.292 + 208.956 = $603 Mil.
Accounts Receivable was $514 Mil.
Revenue was 2159.525 + 2152.686 + 2116.241 + 2170.184 = $8,599 Mil.
Gross Profit was 330.306 + 352.801 + 344.193 + 351.779 = $1,379 Mil.
Total Current Assets was $1,952 Mil.
Total Assets was $4,761 Mil.
Property, Plant and Equipment(Net PPE) was $949 Mil.
Depreciation, Depletion and Amortization(DDA) was $124 Mil.
Selling, General & Admin. Expense(SGA) was $640 Mil.
Total Current Liabilities was $789 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)
=(536.505 / 9095.687) / (514.398 / 8598.636)
=0.05898455 / 0.05982321
=0.986

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)
=(378.758 / 8598.636) / (363.999 / 9095.687)
=0.16038346 / 0.16787242
=0.9554

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 - (2245.041 + 978.15) / 5188.433) / (1 - (1951.59 + 949.021) / 4761.249)
=0.37877371 / 0.3907878
=0.9693

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
=9095.687 / 8598.636
=1.0578

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))
=(123.853 / (123.853 + 949.021)) / (128.998 / (128.998 + 978.15))
=0.1154404 / 0.11651378
=0.9908

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)
=(632.453 / 9095.687) / (639.581 / 8598.636)
=0.06953329 / 0.07438168
=0.9348

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 + 785.099) / 5188.433) / ((250 + 789.484) / 4761.249)
=0.19950128 / 0.21832171
=0.9138

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
=(588.753 - 20.513 - 603.322) / 5188.433
=-0.0068

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 -2.47 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 0.82220.97441.07040.99481.02780.93651.04740.97861.05481.0229
GMI 1.02570.99120.98551.0541.45290.93470.98041.01521.04431.0024
AQI 0.8711.00511.03741.06950.94260.95010.9961.00420.91591.3468
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 0.95260.9931.02190.92480.54231.06110.96580.93470.93950.9738
LVGI 0.93161.00630.93160.97861.04610.89620.9690.89180.9760.8896
TATA -0.0325-0.0719-0.0147-0.00990.0116-0.0563-0.0222-0.0038-0.0039-0.0269
M-score -2.69-2.72-2.40-2.38-2.04-2.87-2.44-2.38-2.40-2.35

Hormel Foods Corp Quarterly Data

Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14
DSRI 1.031.06651.05481.06511.00471.02951.02291.01291.04950.986
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 1.25591.29251.27761.27251.05271.00260.99030.98880.97150.9908
SGAI 0.94540.9230.93950.93880.98471.00730.97380.97950.9370.9348
LVGI 0.78040.92270.9760.93590.93211.03250.88960.99280.960.9138
TATA 0.01030.0068-0.0039-0.0013-0.0136-0.0338-0.0269-0.0554-0.0219-0.0068
M-score -2.17-2.24-2.37-2.37-2.34-2.46-2.35-2.53-2.50-2.47
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK