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McCormick & Company Inc (NYSE:MKC)
Beneish M-Score
-2.56 (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 -2.56 suggests that the company is not a manipulator.

MKC' s 10-Year Beneish M-Score Range
Min: -3.04   Max: -2.03
Current: -2.56

-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 -2.57.


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 * 0.997+0.528 * 0.9862+0.404 * 0.9942+0.892 * 1.0343+0.115 * 1.009
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1+4.679 * -0.0218-0.327 * 0.9823
=-2.56

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

This Year (Aug14) TTM:Last Year (Aug13) TTM:
Accounts Receivable was $477 Mil.
Revenue was 1042.8 + 1033.4 + 993.4 + 1170 = $4,240 Mil.
Gross Profit was 420.1 + 412.5 + 391.5 + 502.2 = $1,726 Mil.
Total Current Assets was $1,409 Mil.
Total Assets was $4,472 Mil.
Property, Plant and Equipment(Net PPE) was $579 Mil.
Depreciation, Depletion and Amortization(DDA) was $107 Mil.
Selling, General & Admin. Expense(SGA) was $1,106 Mil.
Total Current Liabilities was $1,078 Mil.
Long-Term Debt was $1,014 Mil.
Net Income was 122.9 + 84.5 + 82.5 + 127.6 = $418 Mil.
Non Operating Income was 0.3 + 0.3 + 0.2 + 0.5 = $1 Mil.
Cash Flow from Operations was 93.7 + 105.4 + 76.7 + 237.8 = $514 Mil.
Accounts Receivable was $462 Mil.
Revenue was 1016.4 + 1002.6 + 934.4 + 1145.8 = $4,099 Mil.
Gross Profit was 407.6 + 394.4 + 361.7 + 482.4 = $1,646 Mil.
Total Current Assets was $1,371 Mil.
Total Assets was $4,353 Mil.
Property, Plant and Equipment(Net PPE) was $550 Mil.
Depreciation, Depletion and Amortization(DDA) was $103 Mil.
Selling, General & Admin. Expense(SGA) was $1,069 Mil.
Total Current Liabilities was $1,054 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)
=(476.8 / 4239.6) / (462.4 / 4099.2)
=0.11246344 / 0.1128025
=0.997

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)
=(412.5 / 4099.2) / (420.1 / 4239.6)
=0.40156616 / 0.40718464
=0.9862

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 - (1408.8 + 578.8) / 4472.1) / (1 - (1370.9 + 549.7) / 4353)
=0.55555556 / 0.55878704
=0.9942

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
=4239.6 / 4099.2
=1.0343

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))
=(102.9 / (102.9 + 549.7)) / (107.2 / (107.2 + 578.8))
=0.15767698 / 0.15626822
=1.009

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)
=(1106 / 4239.6) / (1069.4 / 4099.2)
=0.26087367 / 0.26088017
=1

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)
=((1014.3 + 1077.6) / 4472.1) / ((1018.6 + 1054.3) / 4353)
=0.46776682 / 0.47620032
=0.9823

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
=(417.5 - 1.3 - 513.6) / 4472.1
=-0.0218

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 -2.56 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

Nov04Nov05Nov06Nov07Nov08Nov09Nov10Nov11Nov12Nov13
DSRI 1.06250.88290.97951.12170.76560.95491.01270.99651.0051.0354
GMI 0.99240.99760.97471.0041.00780.97540.97861.03191.02170.9976
AQI 0.99441.04551.03871.01171.17731.02310.98471.02260.97761.0044
SGI 1.11311.0261.0481.07361.08931.00491.04531.10811.08561.0272
DEPI 0.96750.90780.93281.05080.92520.96980.98991.0311.00041.0183
SGAI 1.01880.98071.08110.97280.99050.96771.02590.97630.97491.0068
LVGI 0.96720.97971.02750.97911.15790.83860.94471.04810.95410.991
TATA -0.0621-0.0559-0.0632-0.0085-0.0238-0.0349-0.00570.0078-0.0119-0.0179
M-score -2.61-2.81-2.78-2.32-2.71-2.63-2.46-2.33-2.43-2.50

McCormick & Company Inc Quarterly Data

May12Aug12Nov12Feb13May13Aug13Nov13Feb14May14Aug14
DSRI 0.96790.94091.0051.0021.02181.09161.03541.02411.00520.997
GMI 1.04831.02931.02171.00911.00811.01040.99750.99110.9870.9862
AQI 1.02911.03390.97760.98941.00230.97751.00440.99190.9830.9942
SGI 1.13991.11581.08561.05771.03541.03021.02721.03481.03761.0343
DEPI 0.99841.00351.00040.99141.04631.04171.01831.03190.99981.009
SGAI 0.97620.97950.97490.98210.98880.99381.00691.00881.00661
LVGI 1.07211.05670.95410.94970.97771.00160.9910.98930.96360.9823
TATA -0.0179-0.0298-0.0119-0.0139-0.0091-0.0047-0.018-0.0267-0.0265-0.0218
M-score -2.45-2.56-2.43-2.47-2.45-2.39-2.50-2.55-2.57-2.56
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