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The Hershey Co (NYSE:HSY)
Beneish M-Score
-3.26 (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 -3.26 suggests that the company is not a manipulator.

HSY' s Beneish M-Score Range Over the Past 10 Years
Min: -3.35   Max: -2.03
Current: -3.26

-3.35
-2.03

During the past 13 years, the highest Beneish M-Score of The Hershey Co was -2.03. The lowest was -3.35. And the median was -2.71.


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 * 0.9226+0.528 * 0.9915+0.404 * 0.9117+0.892 * 0.9719+0.115 * 0.9555
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0493+4.679 * -0.1258-0.327 * 1.1354
=-3.26

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $544 Mil.
Revenue was 1828.812 + 1909.222 + 1960.779 + 1578.825 = $7,278 Mil.
Gross Profit was 817.376 + 854.36 + 892.064 + 735.408 = $3,299 Mil.
Total Current Assets was $1,773 Mil.
Total Assets was $5,306 Mil.
Property, Plant and Equipment(Net PPE) was $2,230 Mil.
Depreciation, Depletion and Amortization(DDA) was $247 Mil.
Selling, General & Admin. Expense(SGA) was $2,025 Mil.
Total Current Liabilities was $2,337 Mil.
Long-Term Debt was $1,571 Mil.
Net Income was 229.832 + 213.384 + 154.771 + -99.941 = $498 Mil.
Non Operating Income was 21.225 + -54.137 + -9.409 + -4.759 = $-47 Mil.
Cash Flow from Operations was 257.115 + 626.592 + 106.916 + 221.715 = $1,212 Mil.
Accounts Receivable was $607 Mil.
Revenue was 1937.8 + 2010.027 + 1961.578 + 1578.35 = $7,488 Mil.
Gross Profit was 900.843 + 887.065 + 860.137 + 717.474 = $3,366 Mil.
Total Current Assets was $2,108 Mil.
Total Assets was $5,757 Mil.
Property, Plant and Equipment(Net PPE) was $2,099 Mil.
Depreciation, Depletion and Amortization(DDA) was $221 Mil.
Selling, General & Admin. Expense(SGA) was $1,986 Mil.
Total Current Liabilities was $2,175 Mil.
Long-Term Debt was $1,560 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)
=(544.027 / 7277.638) / (606.687 / 7487.755)
=0.07475324 / 0.08102388
=0.9226

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)
=(3365.519 / 7487.755) / (3299.208 / 7277.638)
=0.4494697 / 0.453335
=0.9915

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 - (1772.918 + 2230.071) / 5305.84) / (1 - (2108.099 + 2098.667) / 5757.462)
=0.24555037 / 0.26933673
=0.9117

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
=7277.638 / 7487.755
=0.9719

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))
=(220.567 / (220.567 + 2098.667)) / (246.503 / (246.503 + 2230.071))
=0.09510338 / 0.09953387
=0.9555

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)
=(2025.304 / 7277.638) / (1985.955 / 7487.755)
=0.27829139 / 0.26522703
=1.0493

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)
=((1571.388 + 2336.972) / 5305.84) / ((1560.265 + 2175.13) / 5757.462)
=0.73661475 / 0.64879195
=1.1354

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
=(498.046 - -47.08 - 1212.338) / 5305.84
=-0.1258

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 -3.26 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.

The Hershey Co Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.00810.93180.90020.87340.88810.95521.0570.96311.20271.0083
GMI 1.0241.14520.96310.88380.90981.02280.96730.93751.02140.9816
AQI 0.90941.15190.7581.05330.80660.93561.11950.9771.09521.0791
SGI 1.02241.00051.03761.03231.07031.07231.09271.07551.03860.9953
DEPI 1.07560.64281.15051.27070.95320.99221.09011.11261.11950.9082
SGAI 0.92171.04071.15431.09121.10270.96611.05521.04910.95211.091
LVGI 1.13841.05031.11910.85981.01240.99740.95220.9471.03451.142
TATA -0.0395-0.133-0.0573-0.1714-0.09170.0109-0.0913-0.06870.0015-0.1203
M-score -2.68-3.09-2.97-3.35-3.10-2.41-2.72-2.79-2.19-3.09

The Hershey Co Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.96311.12581.08861.12281.20270.93891.01490.9521.00830.9226
GMI 0.93750.9580.98651.02051.02141.0221.00650.98380.98160.9915
AQI 0.9770.90590.89771.14031.09521.50041.22510.9931.07910.9117
SGI 1.07551.06691.06241.06151.03861.04131.03141.01620.99530.9719
DEPI 1.11261.11841.10751.15661.11951.00420.98720.89730.90820.9555
SGAI 1.06021.05041.01980.99710.96010.9731.00421.03731.07061.0493
LVGI 0.9470.95320.96181.05341.03451.08781.111.13861.1421.1354
TATA -0.0607-0.0502-0.0339-0.0226-0.0007-0.0134-0.109-0.0954-0.1203-0.1258
M-score -2.75-2.58-2.53-2.35-2.20-2.37-2.89-3.03-3.09-3.26
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