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McCormick & Company Inc (NYSE:MKC)
Beneish M-Score
-2.71 (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 -2.71 suggests that the company is not a manipulator.

MKC' s 10-Year Beneish M-Score Range
Min: -3.04   Max: -2.03
Current: -2.71

-3.04
-2.03

During the past 13 years, the highest Beneish M-Score of McCormick & Company Inc was -2.03. The lowest was -3.04. And the median was -2.58.


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 * 0.881+0.528 * 0.9993+0.404 * 0.9688+0.892 * 1.0186+0.115 * 1.0635
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0091+4.679 * -0.023-0.327 * 1.0549
=-2.71

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

This Year (Feb15) TTM:Last Year (Feb14) TTM:
Accounts Receivable was $384 Mil.
Revenue was 1010.4 + 1173.6 + 1042.8 + 1033.4 = $4,260 Mil.
Gross Profit was 389.7 + 506.1 + 420.1 + 412.5 = $1,728 Mil.
Total Current Assets was $1,305 Mil.
Total Assets was $4,198 Mil.
Property, Plant and Equipment(Net PPE) was $581 Mil.
Depreciation, Depletion and Amortization(DDA) was $101 Mil.
Selling, General & Admin. Expense(SGA) was $1,123 Mil.
Total Current Liabilities was $1,221 Mil.
Long-Term Debt was $807 Mil.
Net Income was 71.7 + 148 + 122.9 + 84.5 = $427 Mil.
Non Operating Income was -0.2 + 0.3 + 0.3 + 0.3 = $1 Mil.
Cash Flow from Operations was 95.9 + 227.8 + 93.7 + 105.4 = $523 Mil.
Accounts Receivable was $428 Mil.
Revenue was 993.4 + 1170 + 1016.4 + 1002.6 = $4,182 Mil.
Gross Profit was 391.5 + 502.2 + 407.6 + 394.4 = $1,696 Mil.
Total Current Assets was $1,340 Mil.
Total Assets was $4,430 Mil.
Property, Plant and Equipment(Net PPE) was $571 Mil.
Depreciation, Depletion and Amortization(DDA) was $107 Mil.
Selling, General & Admin. Expense(SGA) was $1,092 Mil.
Total Current Liabilities was $1,012 Mil.
Long-Term Debt was $1,017 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)
=(384.1 / 4260.2) / (428 / 4182.4)
=0.09016009 / 0.10233359
=0.881

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)
=(506.1 / 4182.4) / (389.7 / 4260.2)
=0.40543707 / 0.40570865
=0.9993

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 - (1304.7 + 580.6) / 4197.5) / (1 - (1340.1 + 571) / 4429.7)
=0.5508517 / 0.56857124
=0.9688

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
=4260.2 / 4182.4
=1.0186

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))
=(106.6 / (106.6 + 571)) / (100.8 / (100.8 + 580.6))
=0.15731995 / 0.14793073
=1.0635

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)
=(1122.7 / 4260.2) / (1092.3 / 4182.4)
=0.26353223 / 0.26116584
=1.0091

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)
=((806.8 + 1221) / 4197.5) / ((1016.6 + 1012.1) / 4429.7)
=0.48309708 / 0.45797684
=1.0549

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
=(427.1 - 0.7 - 522.8) / 4197.5
=-0.023

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 -2.71 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

Nov12Feb13May13Aug13Nov13Feb14May14Aug14Nov14Feb15
DSRI 1.0051.0021.02181.09161.03541.02411.00520.9970.9680.881
GMI 1.02171.00911.00811.01040.99750.99110.9870.98620.99080.9993
AQI 0.97760.98941.00230.97751.00440.99190.9830.99420.96470.9688
SGI 1.08561.05771.03541.03021.02721.03481.03761.03431.02911.0186
DEPI 1.00040.99141.04631.04171.01831.03190.99981.0091.06661.0635
SGAI 0.97490.98210.98880.99381.00691.00881.006611.01421.0091
LVGI 0.95410.94970.97771.00160.9910.98930.96360.98231.03421.0549
TATA -0.0125-0.0145-0.0099-0.0056-0.0176-0.0261-0.0257-0.021-0.0149-0.023
M-score -2.44-2.48-2.45-2.39-2.50-2.55-2.56-2.55-2.58-2.71
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