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The Hershey Co (NYSE:HSY)
Beneish M-Score
-3.02 (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 -3.02 suggests that the company is not a manipulator.

HSY' s Beneish M-Score Range Over the Past 10 Years
Min: -3.35   Max: -1.94
Current: -3.02

-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 -2.68.


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 * 0.952+0.528 * 0.9838+0.404 * 0.993+0.892 * 1.0162+0.115 * 0.8973
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0295+4.679 * -0.093-0.327 * 1.1386
=-3.02

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $761 Mil.
Revenue was 1960.779 + 1578.825 + 1937.8 + 2010.027 = $7,487 Mil.
Gross Profit was 892.064 + 735.408 + 900.843 + 887.065 = $3,415 Mil.
Total Current Assets was $2,209 Mil.
Total Assets was $5,631 Mil.
Property, Plant and Equipment(Net PPE) was $2,188 Mil.
Depreciation, Depletion and Amortization(DDA) was $241 Mil.
Selling, General & Admin. Expense(SGA) was $2,044 Mil.
Total Current Liabilities was $2,235 Mil.
Long-Term Debt was $1,830 Mil.
Net Income was 154.771 + -99.941 + 244.737 + 202.508 = $502 Mil.
Non Operating Income was -9.409 + -4.759 + 0 + 1.448 = $-13 Mil.
Cash Flow from Operations was 106.916 + 224.546 + 256.402 + 450.788 = $1,039 Mil.
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 $1,953 Mil.
Total Current Liabilities was $2,192 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)
=(760.789 / 7487.431) / (786.366 / 7367.994)
=0.10160882 / 0.10672729
=0.952

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)
=(735.408 / 7367.994) / (892.064 / 7487.431)
=0.44876353 / 0.45614844
=0.9838

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 - (2209.33 + 2187.736) / 5630.62) / (1 - (2532.572 + 2078.713) / 5916.553)
=0.2190796 / 0.22061291
=0.993

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
=7487.431 / 7367.994
=1.0162

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))
=(203.482 / (203.482 + 2078.713)) / (241.381 / (241.381 + 2187.736))
=0.08916065 / 0.09936985
=0.8973

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)
=(2043.576 / 7487.431) / (1953.327 / 7367.994)
=0.2729342 / 0.26510974
=1.0295

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)
=((1830.186 + 2235.241) / 5630.62) / ((1559.77 + 2192.219) / 5916.553)
=0.7220212 / 0.63415117
=1.1386

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
=(502.075 - -12.72 - 1038.652) / 5630.62
=-0.093

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 -3.02 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 1.00470.93180.90020.87340.88810.95521.0570.96311.2027
GMI 1.02341.14520.96310.88380.90981.02280.96730.93751.0214
AQI 0.90941.15190.7581.05330.80660.93561.11950.9771.0998
SGI 1.02581.00051.03761.03231.07031.07231.09271.07551.0386
DEPI 1.07560.64281.15051.27070.95320.99221.09011.11261.1195
SGAI 0.91871.04071.15431.09121.10270.96611.05521.04910.9521
LVGI 1.13841.05031.11910.85981.01240.99740.95220.9471.0353
TATA -0.0116-0.133-0.0573-0.1714-0.09170.0093-0.0913-0.06870.0015
M-score -2.55-3.09-2.97-3.35-3.10-2.42-2.72-2.79-2.19

The Hershey Co Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.94570.96311.12581.08861.12281.20270.93891.01490.9521.0083
GMI 0.92470.93750.9580.98651.02051.02141.0221.00650.98380.9816
AQI 0.93180.9770.90590.89771.14031.09981.50041.22510.9931.0745
SGI 1.07441.07551.06691.06241.06151.03861.04131.03141.01620.9953
DEPI 1.16551.11261.11841.10751.15661.11951.00420.98720.89731.1861
SGAI 1.07461.04911.03961.00920.98690.95670.96490.99621.02951.0806
LVGI 0.92950.9470.95320.96181.05341.03531.08781.111.13861.1411
TATA -0.0554-0.0599-0.0494-0.033-0.0219-0.0001-0.0106-0.1065-0.093-0.0065
M-score -2.76-2.75-2.57-2.52-2.34-2.20-2.36-2.88-3.02-2.53
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