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The Hershey Co (NYSE:HSY)
Beneish M-Score
-2.30 (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 -2.30 suggests that the company is not a manipulator.

HSY' s 10-Year Beneish M-Score Range
Min: -3.35   Max: -1.94
Current: -2.3

-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 * 1.1228+0.528 * 1.0205+0.404 * 1.1403+0.892 * 1.0615+0.115 * 1.1566
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9726+4.679 * -0.0134-0.327 * 1.0534
=-2.30

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $786 Mil.
Revenue was 1961.578 + 1578.35 + 1871.813 + 1956.253 = $7,368 Mil.
Gross Profit was 860.137 + 717.474 + 871.49 + 857.386 = $3,306 Mil.
Total Current Assets was $2,533 Mil.
Total Assets was $5,917 Mil.
Property, Plant and Equipment(Net PPE) was $2,079 Mil.
Depreciation, Depletion and Amortization(DDA) was $203 Mil.
Selling, General & Admin. Expense(SGA) was $1,925 Mil.
Total Current Liabilities was $2,192 Mil.
Long-Term Debt was $1,560 Mil.
Net Income was 223.741 + 168.168 + 252.495 + 186.075 = $830 Mil.
Non Operating Income was 0 + 0 + -42.57 + 0 = $-43 Mil.
Cash Flow from Operations was 215.501 + -31.825 + 203.757 + 564.691 = $952 Mil.
Accounts Receivable was $660 Mil.
Revenue was 1853.886 + 1508.514 + 1827.426 + 1751.035 = $6,941 Mil.
Gross Profit was 855.551 + 718.574 + 849.337 + 755.208 = $3,179 Mil.
Total Current Assets was $2,376 Mil.
Total Assets was $5,078 Mil.
Property, Plant and Equipment(Net PPE) was $1,720 Mil.
Depreciation, Depletion and Amortization(DDA) was $198 Mil.
Selling, General & Admin. Expense(SGA) was $1,865 Mil.
Total Current Liabilities was $1,261 Mil.
Long-Term Debt was $1,796 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)
=(786.366 / 7367.994) / (659.74 / 6940.861)
=0.10672729 / 0.09505161
=1.1228

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)
=(717.474 / 6940.861) / (860.137 / 7367.994)
=0.4579648 / 0.44876353
=1.0205

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 - (2532.572 + 2078.713) / 5916.553) / (1 - (2375.694 + 1719.82) / 5077.919)
=0.22061291 / 0.19346606
=1.1403

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
=7367.994 / 6940.861
=1.0615

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))
=(197.746 / (197.746 + 1719.82)) / (203.482 / (203.482 + 2078.713))
=0.10312344 / 0.08916065
=1.1566

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)
=(1925.074 / 7367.994) / (1864.582 / 6940.861)
=0.26127519 / 0.26863843
=0.9726

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)
=((1559.77 + 2192.219) / 5916.553) / ((1796.263 + 1260.768) / 5077.919)
=0.63415117 / 0.60202437
=1.0534

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
=(830.479 - -42.57 - 952.124) / 5916.553
=-0.0134

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 -2.30 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

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.11130.97091.0570.95320.96140.94570.96311.12581.08861.1228
GMI 0.99940.99240.96730.95250.94020.92470.93750.9580.98651.0205
AQI 1.1071.0671.11950.91040.99140.93180.9770.90590.89771.1403
SGI 1.07071.07741.09271.07861.07821.07441.07551.06691.06241.0615
DEPI 0.98591.00971.09011.13871.18061.16551.11261.11841.10751.1566
SGAI 0.98371.01851.05521.0771.07851.07461.04911.0381.0070.9726
LVGI 0.98490.99820.95220.93670.97130.92950.9470.95320.96181.0534
TATA 0.0124-0.0598-0.0913-0.0744-0.0755-0.0554-0.0599-0.0415-0.0248-0.0134
M-score -2.21-2.70-2.72-2.84-2.82-2.76-2.75-2.54-2.48-2.30
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