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McCormick & Company Inc (NYSE:MKC)
Beneish M-Score
-2.58 (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.

McCormick & Company Inc has a M-score of -2.58 suggests that the company is not a manipulator.

MKC' s 10-Year Beneish M-Score Range
Min: -3.04   Max: -2.18
Current: -2.58

-3.04
-2.18

During the past 13 years, the highest Beneish M-Score of McCormick & Company Inc was -2.18. The lowest was -3.04. And the median was -2.61.


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 McCormick & Company Inc 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 * 0.968+0.528 * 0.9908+0.404 * 0.9647+0.892 * 1.0291+0.115 * 1.0666
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0142+4.679 * -0.0151-0.327 * 1.0342
=-2.58

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

This Year (Nov14) TTM:Last Year (Nov13) TTM:
Accounts Receivable was $494 Mil.
Revenue was 1173.6 + 1042.8 + 1033.4 + 993.4 = $4,243 Mil.
Gross Profit was 506.1 + 420.1 + 412.5 + 391.5 = $1,730 Mil.
Total Current Assets was $1,416 Mil.
Total Assets was $4,414 Mil.
Property, Plant and Equipment(Net PPE) was $603 Mil.
Depreciation, Depletion and Amortization(DDA) was $103 Mil.
Selling, General & Admin. Expense(SGA) was $1,122 Mil.
Total Current Liabilities was $1,122 Mil.
Long-Term Debt was $1,014 Mil.
Net Income was 148 + 122.9 + 84.5 + 82.5 = $438 Mil.
Non Operating Income was 0.3 + 0.3 + 0.3 + 0.2 = $1 Mil.
Cash Flow from Operations was 227.8 + 93.7 + 105.4 + 76.7 = $504 Mil.
Accounts Receivable was $496 Mil.
Revenue was 1170 + 1016.4 + 1002.6 + 934.4 = $4,123 Mil.
Gross Profit was 502.2 + 407.6 + 394.4 + 361.7 = $1,666 Mil.
Total Current Assets was $1,370 Mil.
Total Assets was $4,450 Mil.
Property, Plant and Equipment(Net PPE) was $577 Mil.
Depreciation, Depletion and Amortization(DDA) was $106 Mil.
Selling, General & Admin. Expense(SGA) was $1,075 Mil.
Total Current Liabilities was $1,063 Mil.
Long-Term Debt was $1,019 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)
=(493.6 / 4243.2) / (495.5 / 4123.4)
=0.1163273 / 0.12016782
=0.968

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)
=(420.1 / 4123.4) / (506.1 / 4243.2)
=0.40401125 / 0.4077583
=0.9908

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 - (1416.2 + 602.7) / 4414.3) / (1 - (1370.2 + 576.6) / 4449.7)
=0.54264549 / 0.56248736
=0.9647

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
=4243.2 / 4123.4
=1.0291

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))
=(106 / (106 + 576.6)) / (102.7 / (102.7 + 602.7))
=0.1552886 / 0.14559115
=1.0666

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)
=(1122 / 4243.2) / (1075.1 / 4123.4)
=0.26442308 / 0.26073144
=1.0142

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)
=((1014.1 + 1122) / 4414.3) / ((1019 + 1063.1) / 4449.7)
=0.48390458 / 0.46791919
=1.0342

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
=(437.9 - 1.1 - 503.6) / 4414.3
=-0.0151

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.

McCormick & Company Inc has a M-score of -2.58 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.

McCormick & Company Inc Annual Data

Nov05Nov06Nov07Nov08Nov09Nov10Nov11Nov12Nov13Nov14
DSRI 0.88290.97951.12170.76560.95491.01270.99651.0051.03540.968
GMI 0.99760.97471.0041.00780.97540.97861.03191.02170.99760.9908
AQI 1.04551.03871.01171.17731.02310.98471.02260.97761.00440.9647
SGI 1.0261.0481.07361.08931.00491.04531.10811.08561.02721.0291
DEPI 0.90780.93281.05080.92520.96980.98991.0311.00041.01831.0666
SGAI 0.98071.08110.97280.99050.96771.02590.97630.97491.00681.0143
LVGI 0.97971.02750.97911.15790.83860.94471.04810.95410.9911.0342
TATA -0.0559-0.0632-0.0085-0.0238-0.0349-0.00570.0078-0.0124-0.0176-0.0151
M-score -2.81-2.78-2.32-2.71-2.63-2.46-2.33-2.44-2.50-2.58

McCormick & Company Inc Quarterly Data

Aug12Nov12Feb13May13Aug13Nov13Feb14May14Aug14Nov14
DSRI 0.94091.0051.0021.02181.09161.03541.02411.00520.9970.968
GMI 1.02931.02171.00911.00811.01040.99750.99110.9870.98620.9908
AQI 1.03390.97760.98941.00230.97751.00440.99190.9830.99420.9647
SGI 1.11581.08561.05771.03541.03021.02721.03481.03761.03431.0291
DEPI 1.00351.00040.99141.04631.04171.01831.03190.99981.0091.0666
SGAI 0.97950.97490.98210.98880.99381.00691.00881.006611.0142
LVGI 1.05670.95410.94970.97771.00160.9910.98930.96360.98231.0342
TATA -0.0296-0.0125-0.0145-0.0099-0.0056-0.0176-0.0263-0.026-0.0212-0.0151
M-score -2.56-2.44-2.48-2.45-2.39-2.50-2.55-2.57-2.55-2.58
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