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The Hershey Co (NYSE:HSY)
Beneish M-Score
-2.48 (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 -2.48 suggests that the company is not a manipulator.

HSY' s 10-Year Beneish M-Score Range
Min: -3.35   Max: -1.94
Current: -2.48

-3.35
-1.94

During the past 13 years, the highest Beneish M-Score of The Hershey Co was -1.94. The lowest was -3.35. And the median was -2.66.


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 * 1.0886+0.528 * 0.9865+0.404 * 0.8977+0.892 * 1.0624+0.115 * 1.1075
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.007+4.679 * -0.0248-0.327 * 0.9618
=-2.48

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $424 Mil.
Revenue was 1578.35 + 1871.813 + 1956.253 + 1853.886 = $7,260 Mil.
Gross Profit was 717.474 + 871.49 + 857.386 + 855.551 = $3,302 Mil.
Total Current Assets was $2,262 Mil.
Total Assets was $5,185 Mil.
Property, Plant and Equipment(Net PPE) was $1,943 Mil.
Depreciation, Depletion and Amortization(DDA) was $202 Mil.
Selling, General & Admin. Expense(SGA) was $1,929 Mil.
Total Current Liabilities was $1,262 Mil.
Long-Term Debt was $1,795 Mil.
Net Income was 168.168 + 252.495 + 186.075 + 232.985 = $840 Mil.
Non Operating Income was 0 + -42.57 + 0 + 0 = $-43 Mil.
Cash Flow from Operations was -31.825 + 203.757 + 564.691 + 274.268 = $1,011 Mil.
Accounts Receivable was $366 Mil.
Revenue was 1508.514 + 1827.426 + 1751.035 + 1746.709 = $6,834 Mil.
Gross Profit was 718.574 + 849.337 + 755.208 + 742.757 = $3,066 Mil.
Total Current Assets was $1,999 Mil.
Total Assets was $4,697 Mil.
Property, Plant and Equipment(Net PPE) was $1,709 Mil.
Depreciation, Depletion and Amortization(DDA) was $199 Mil.
Selling, General & Admin. Expense(SGA) was $1,804 Mil.
Total Current Liabilities was $1,084 Mil.
Long-Term Debt was $1,794 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)
=(423.648 / 7260.302) / (366.288 / 6833.684)
=0.05835129 / 0.05360037
=1.0886

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)
=(871.49 / 6833.684) / (717.474 / 7260.302)
=0.44864176 / 0.45478838
=0.9865

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 - (2261.809 + 1943.387) / 5184.969) / (1 - (1998.887 + 1709.346) / 4696.868)
=0.1889641 / 0.21048814
=0.8977

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
=7260.302 / 6833.684
=1.0624

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))
=(199.277 / (199.277 + 1709.346)) / (202.291 / (202.291 + 1943.387))
=0.10440878 / 0.09427836
=1.1075

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)
=(1929.491 / 7260.302) / (1803.568 / 6833.684)
=0.26575906 / 0.26392324
=1.007

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)
=((1794.83 + 1261.565) / 5184.969) / ((1794.493 + 1084.206) / 4696.868)
=0.58947218 / 0.61289757
=0.9618

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
=(839.723 - -42.57 - 1010.891) / 5184.969
=-0.0248

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 -2.48 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.94781.13631.00470.93180.90020.87340.88810.95521.0570.9631
GMI 0.98811.02141.02341.14520.96310.88380.90981.02280.96730.9375
AQI 1.11031.17720.90941.15190.7581.05330.80660.93561.11950.977
SGI 1.05841.09141.02581.00051.03761.03231.07031.07231.09271.0755
DEPI 0.96750.87211.07560.64281.15051.27070.95320.99221.09011.1126
SGAI 1.00340.96480.91871.04071.15431.09121.10270.96611.05521.0491
LVGI 1.19281.1031.13841.05031.11910.85981.01240.99740.95220.947
TATA -0.03840.0269-0.0116-0.133-0.0573-0.1714-0.09170.0093-0.0913-0.0687
M-score -2.68-2.11-2.55-3.09-2.97-3.35-3.10-2.42-2.72-2.79

The Hershey Co Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1.08091.11130.97091.0570.95320.96140.94570.96311.12581.0886
GMI 1.01430.99940.99240.96730.95250.94020.92470.93750.9580.9865
AQI 1.10161.1071.0671.11950.91040.99140.93180.9770.90590.8977
SGI 1.07231.07071.07741.09271.07861.07821.07441.07551.06691.0624
DEPI 1.00410.98591.00971.09011.13871.18061.16551.11261.11841.1075
SGAI 0.95930.98371.01851.05521.0771.07851.07461.04911.0381.007
LVGI 0.9990.98490.99820.95220.93670.97130.92950.9470.95320.9618
TATA -0.0080.0124-0.0598-0.0913-0.0744-0.0755-0.0554-0.0599-0.0415-0.0248
M-score -2.32-2.21-2.70-2.72-2.84-2.82-2.76-2.75-2.54-2.48
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