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The Hershey Co (NYSE:HSY)
Beneish M-Score
-2.54 (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 -2.54 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: -2.54

-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 -2.70.


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 * 1.0131+0.528 * 1.0294+0.404 * 1.2145+0.892 * 0.9855+0.115 * 0.8053
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9513+4.679 * -0.0278-0.327 * 1.0377
=-2.54

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $760 Mil.
Revenue was 2003.454 + 1637.671 + 1828.812 + 1909.222 = $7,379 Mil.
Gross Profit was 850.848 + 747.398 + 817.376 + 854.36 = $3,270 Mil.
Total Current Assets was $2,131 Mil.
Total Assets was $5,845 Mil.
Property, Plant and Equipment(Net PPE) was $2,160 Mil.
Depreciation, Depletion and Amortization(DDA) was $304 Mil.
Selling, General & Admin. Expense(SGA) was $1,951 Mil.
Total Current Liabilities was $2,017 Mil.
Long-Term Debt was $2,362 Mil.
Net Income was 227.403 + 145.956 + 229.832 + 213.384 = $817 Mil.
Non Operating Income was -21.8 + -8.128 + 21.225 + -54.137 = $-63 Mil.
Cash Flow from Operations was 75.441 + 89.983 + 257.115 + 619.371 = $1,042 Mil.
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 $2,080 Mil.
Total Current Liabilities was $2,235 Mil.
Long-Term Debt was $1,830 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)
=(759.619 / 7379.159) / (760.789 / 7487.431)
=0.10294113 / 0.10160882
=1.0131

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)
=(3415.38 / 7487.431) / (3269.982 / 7379.159)
=0.45614844 / 0.44313749
=1.0294

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 - (2130.517 + 2159.589) / 5845.413) / (1 - (2209.33 + 2187.736) / 5630.62)
=0.26607307 / 0.2190796
=1.2145

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
=7379.159 / 7487.431
=0.9855

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))
=(241.381 / (241.381 + 2187.736)) / (303.974 / (303.974 + 2159.589))
=0.09936985 / 0.12338795
=0.8053

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)
=(1950.608 / 7379.159) / (2080.451 / 7487.431)
=0.26434015 / 0.27785912
=0.9513

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)
=((2362.466 + 2017.035) / 5845.413) / ((1830.186 + 2235.241) / 5630.62)
=0.74922011 / 0.7220212
=1.0377

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
=(816.575 - -62.84 - 1041.91) / 5845.413
=-0.0278

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 -2.54 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 local exchange's currency.

The Hershey Co Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.00470.93180.90020.87340.88810.95521.0570.96311.20271.0083
GMI 1.02341.14520.96310.88380.90981.02280.96730.93751.02140.9816
AQI 0.90941.15190.7581.05330.80660.93561.11950.9771.09521.0791
SGI 1.02581.00051.03761.03231.07031.07231.09271.07551.03860.9953
DEPI 1.07560.64281.15051.27070.95320.99221.09011.11261.11950.9082
SGAI 0.91871.04071.15431.09121.10270.96611.05521.06020.95551.0757
LVGI 1.13841.05031.11910.85981.01240.99740.95220.9471.03451.142
TATA -0.0395-0.133-0.0573-0.1714-0.09170.0093-0.0913-0.06950.0009-0.1203
M-score -2.68-3.09-2.97-3.35-3.10-2.42-2.72-2.79-2.19-3.09

The Hershey Co Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 1.08861.12281.20270.93891.01490.9521.00830.92261.1131.0131
GMI 0.98651.02051.02141.0221.00650.98380.98160.99151.00111.0294
AQI 0.89771.14031.09521.50041.22510.9931.07910.91171.21131.2145
SGI 1.06241.06151.03861.04131.03141.01620.99530.97190.97970.9855
DEPI 1.10751.15661.11951.00420.98720.89730.90820.95550.83770.8053
SGAI 1.01980.99710.96010.9731.00421.03731.07061.04931.02470.9513
LVGI 0.96181.05341.03451.08781.111.13861.1421.13541.16461.0377
TATA -0.0339-0.0226-0.0007-0.0134-0.1099-0.0967-0.1203-0.1258-0.0504-0.0278
M-score -2.53-2.35-2.20-2.37-2.90-3.04-3.09-3.26-2.62-2.54
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