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The Hershey Co (NYSE:HSY)
Beneish M-Score
-2.87 (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 -2.87 suggests that the company is not a manipulator.

HSY' s 10-Year Beneish M-Score Range
Min: -3.35   Max: -1.94
Current: -2.87

-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 * 1.0149+0.528 * 1.0065+0.404 * 1.2251+0.892 * 1.0314+0.115 * 0.9872
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9938+4.679 * -0.1049-0.327 * 1.11
=-2.87

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $443 Mil.
Revenue was 1578.825 + 1937.8 + 2010.027 + 1961.578 = $7,488 Mil.
Gross Profit was 735.408 + 900.843 + 887.065 + 860.137 = $3,383 Mil.
Total Current Assets was $2,007 Mil.
Total Assets was $5,449 Mil.
Property, Plant and Equipment(Net PPE) was $2,180 Mil.
Depreciation, Depletion and Amortization(DDA) was $230 Mil.
Selling, General & Admin. Expense(SGA) was $1,982 Mil.
Total Current Liabilities was $2,018 Mil.
Long-Term Debt was $1,547 Mil.
Net Income was -99.941 + 244.737 + 202.508 + 223.741 = $571 Mil.
Non Operating Income was -4.759 + 0 + 0 + 0 = $-5 Mil.
Cash Flow from Operations was 224.546 + 256.402 + 450.788 + 215.501 = $1,147 Mil.
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 $1,934 Mil.
Total Current Liabilities was $1,262 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)
=(443.452 / 7488.23) / (423.648 / 7260.302)
=0.05921987 / 0.05835129
=1.0149

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)
=(900.843 / 7260.302) / (735.408 / 7488.23)
=0.45478838 / 0.45183615
=1.0065

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 - (2007.447 + 2180.326) / 5449.33) / (1 - (2261.809 + 1943.387) / 5184.969)
=0.23150681 / 0.1889641
=1.2251

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
=7488.23 / 7260.302
=1.0314

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))
=(202.291 / (202.291 + 1943.387)) / (230.2 / (230.2 + 2180.326))
=0.09427836 / 0.09549783
=0.9872

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)
=(1982.182 / 7488.23) / (1933.844 / 7260.302)
=0.26470635 / 0.26635862
=0.9938

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)
=((1547.399 + 2018.272) / 5449.33) / ((1794.83 + 1261.565) / 5184.969)
=0.654332 / 0.58947218
=1.11

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
=(571.045 - -4.759 - 1147.237) / 5449.33
=-0.1049

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 -2.87 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.13631.00470.93180.90020.87340.88810.95521.0570.96311.2027
GMI 1.02141.02341.14520.96310.88380.90981.02280.96730.93751.0214
AQI 1.17720.90941.15190.7581.05330.80660.93561.11950.9771.0998
SGI 1.09141.02581.00051.03761.03231.07031.07231.09271.07551.0386
DEPI 0.87211.07560.64281.15051.27070.95320.99221.09011.11261.1195
SGAI 0.96480.91871.04071.15431.09121.10270.96611.05521.04910.9521
LVGI 1.1031.13841.05031.11910.85981.01240.99740.95220.9471.0353
TATA 0.0269-0.0116-0.133-0.0573-0.1714-0.09170.0093-0.0913-0.06870.0015
M-score -2.11-2.55-3.09-2.97-3.35-3.10-2.42-2.72-2.79-2.19

The Hershey Co Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 0.95320.96140.94570.96311.12581.08861.12281.20270.93891.0149
GMI 0.95250.94020.92470.93750.9580.98651.02051.02141.0221.0065
AQI 0.91040.99140.93180.9770.90590.89771.14031.09981.50041.2251
SGI 1.07861.07821.07441.07551.06691.06241.06151.03861.04131.0314
DEPI 1.13871.18061.16551.11261.11841.10751.15661.11951.00420.9872
SGAI 1.0771.07851.07461.04911.03961.00920.97480.95420.96260.9938
LVGI 0.93670.97130.92950.9470.95320.96181.05341.03531.08781.11
TATA -0.0744-0.0755-0.0554-0.0599-0.0494-0.033-0.02060.0015-0.009-0.1049
M-score -2.84-2.82-2.76-2.75-2.57-2.52-2.34-2.19-2.35-2.87
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