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The Hershey Co (NYSE:HSY)
Beneish M-Score
-1.77 (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.

The Hershey Co has a M-score of -1.77 signals that the company is a manipulator.

HSY' s 10-Year Beneish M-Score Range
Min: -3.35   Max: -2.11
Current: -1.77

-3.35
-2.11

During the past 13 years, the highest Beneish M-Score of The Hershey Co was -2.11. The lowest was -3.35. And the median was -2.70.


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 The Hershey Co 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 * 1.2027+0.528 * 1.0214+0.404 * 1.0998+0.892 * 1.0386+0.115 * 1.5094
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9535+4.679 * 0.0816-0.327 * 1.0353
=-1.77

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $597 Mil.
Revenue was 2010.027 + 1961.578 + 1578.35 + 1871.813 = $7,422 Mil.
Gross Profit was 887.065 + 860.137 + 717.474 + 871.49 = $3,336 Mil.
Total Current Assets was $2,247 Mil.
Total Assets was $5,630 Mil.
Property, Plant and Equipment(Net PPE) was $2,152 Mil.
Depreciation, Depletion and Amortization(DDA) was $153 Mil.
Selling, General & Admin. Expense(SGA) was $1,904 Mil.
Total Current Liabilities was $1,936 Mil.
Long-Term Debt was $1,549 Mil.
Net Income was 202.508 + 223.741 + 168.168 + 252.495 = $847 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 0 + 215.501 + -31.825 + 203.757 = $387 Mil.
Accounts Receivable was $478 Mil.
Revenue was 1956.253 + 1853.886 + 1508.514 + 1827.426 = $7,146 Mil.
Gross Profit was 857.386 + 855.551 + 718.574 + 849.337 = $3,281 Mil.
Total Current Assets was $2,487 Mil.
Total Assets was $5,357 Mil.
Property, Plant and Equipment(Net PPE) was $1,805 Mil.
Depreciation, Depletion and Amortization(DDA) was $201 Mil.
Selling, General & Admin. Expense(SGA) was $1,923 Mil.
Total Current Liabilities was $1,408 Mil.
Long-Term Debt was $1,795 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)
=(596.94 / 7421.768) / (477.912 / 7146.079)
=0.08043097 / 0.06687751
=1.2027

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)
=(860.137 / 7146.079) / (887.065 / 7421.768)
=0.45911163 / 0.44951095
=1.0214

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 - (2247.047 + 2151.901) / 5629.516) / (1 - (2487.334 + 1805.345) / 5357.488)
=0.21859215 / 0.19875154
=1.0998

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
=7421.768 / 7146.079
=1.0386

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))
=(201.033 / (201.033 + 1805.345)) / (153.006 / (153.006 + 2151.901))
=0.10019697 / 0.06638272
=1.5094

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)
=(1903.895 / 7421.768) / (1922.508 / 7146.079)
=0.2565285 / 0.26902977
=0.9535

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)
=((1548.963 + 1935.647) / 5629.516) / ((1795.142 + 1408.022) / 5357.488)
=0.61898927 / 0.59788543
=1.0353

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
=(846.912 - 0 - 387.433) / 5629.516
=0.0816

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.

The Hershey Co has a M-score of -1.77 signals that the company is likely to 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.

The Hershey Co Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.13631.00470.93180.90020.87340.88810.95521.0570.9631
GMI 1.02141.02341.14520.96310.88380.90981.02280.96730.9375
AQI 1.17720.90941.15190.7581.05330.80660.93561.11950.977
SGI 1.09141.02581.00051.03761.03231.07031.07231.09271.0755
DEPI 0.87211.07560.64281.15051.27070.95320.99221.09011.1126
SGAI 0.96480.91871.04071.15431.09121.10270.96611.05521.0491
LVGI 1.1031.13841.05031.11910.85981.01240.99740.95220.947
TATA 0.0269-0.0116-0.133-0.0573-0.1714-0.09170.0093-0.0913-0.0687
M-score -2.11-2.55-3.09-2.97-3.35-3.10-2.42-2.72-2.79

The Hershey Co Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.97091.0570.95320.96140.94570.96311.12581.08861.12281.2027
GMI 0.99240.96730.95250.94020.92470.93750.9580.98651.02051.0214
AQI 1.0671.11950.91040.99140.93180.9770.90590.89771.14031.0998
SGI 1.07741.09271.07861.07821.07441.07551.06691.06241.06151.0386
DEPI 1.00971.09011.13871.18061.16551.11261.11841.10751.15661.5094
SGAI 1.01851.05521.0771.07851.07461.04911.03961.00850.97410.9535
LVGI 0.99820.95220.93670.97130.92950.9470.95320.96181.05341.0353
TATA -0.0598-0.0913-0.0744-0.0755-0.0554-0.0599-0.0494-0.033-0.02060.0816
M-score -2.70-2.72-2.84-2.82-2.76-2.75-2.57-2.52-2.34-1.77
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