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McCormick & Company Inc (NYSE:MKC)
Beneish M-Score
-2.74 (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 -2.74 suggests that the company is not a manipulator.

MKC' s Beneish M-Score Range Over the Past 10 Years
Min: -3.04   Max: -2.18
Current: -2.74

-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 * 0.8811+0.528 * 1.0094+0.404 * 1.0129+0.892 * 1.0067+0.115 * 1.0474
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0096+4.679 * -0.0326-0.327 * 1.0529
=-2.74

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

This Year (Aug15) TTM:Last Year (Aug14) TTM:
Accounts Receivable was $423 Mil.
Revenue was 1059.9 + 1024.1 + 1010.4 + 1173.6 = $4,268 Mil.
Gross Profit was 421.9 + 404 + 389.7 + 506.1 = $1,722 Mil.
Total Current Assets was $1,375 Mil.
Total Assets was $4,491 Mil.
Property, Plant and Equipment(Net PPE) was $589 Mil.
Depreciation, Depletion and Amortization(DDA) was $103 Mil.
Selling, General & Admin. Expense(SGA) was $1,124 Mil.
Total Current Liabilities was $1,405 Mil.
Long-Term Debt was $807 Mil.
Net Income was 95.7 + 85.5 + 71.7 + 145.9 = $399 Mil.
Non Operating Income was 0.2 + 0.6 + -0.2 + 0.3 = $1 Mil.
Cash Flow from Operations was 130.7 + 90 + 95.9 + 227.8 = $544 Mil.
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.



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)
=(422.9 / 4268) / (476.8 / 4239.6)
=0.09908622 / 0.11246344
=0.8811

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)
=(404 / 4239.6) / (421.9 / 4268)
=0.40718464 / 0.40339738
=1.0094

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 - (1374.5 + 589.1) / 4490.7) / (1 - (1408.8 + 578.8) / 4472.1)
=0.56274078 / 0.55555556
=1.0129

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
=4268 / 4239.6
=1.0067

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))
=(107.2 / (107.2 + 578.8)) / (103.3 / (103.3 + 589.1))
=0.15626822 / 0.14919122
=1.0474

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)
=(1124.1 / 4268) / (1106 / 4239.6)
=0.26337863 / 0.26087367
=1.0096

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)
=((807.2 + 1404.6) / 4490.7) / ((1014.3 + 1077.6) / 4472.1)
=0.492529 / 0.46776682
=1.0529

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
=(398.8 - 0.9 - 544.4) / 4490.7
=-0.0326

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 -2.74 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

Nov06Nov07Nov08Nov09Nov10Nov11Nov12Nov13Nov14Nov15
DSRI 0.97951.12170.76560.95491.01270.99651.0051.03540.9680.9108
GMI 0.97471.0041.00780.97540.97861.03191.02170.99760.99081.0084
AQI 1.03871.01171.17731.02310.98471.02260.97761.00440.96471.015
SGI 1.0481.07361.08931.00491.04531.10811.08561.02721.02911.0125
DEPI 0.93281.05080.92520.96980.98991.0311.00041.01831.06660.9958
SGAI 1.08110.97280.99050.96771.02590.97630.97491.00681.01430.9924
LVGI 1.02750.97911.15790.83860.94471.04810.95410.9911.03421.0511
TATA -0.0632-0.0085-0.0238-0.0349-0.00570.0076-0.0119-0.0173-0.0146-0.042
M-score -2.78-2.32-2.71-2.63-2.46-2.33-2.43-2.50-2.58-2.75

McCormick & Company Inc Quarterly Data

Aug13Nov13Feb14May14Aug14Nov14Feb15May15Aug15Nov15
DSRI 1.09161.03541.02411.00520.9970.9680.8810.92820.88110.9108
GMI 1.01040.99750.99110.9870.98620.99080.99931.00541.00941.0084
AQI 0.97751.00440.99190.9830.99420.96470.96880.97491.01291.015
SGI 1.03021.02721.03481.03761.03431.02911.01861.00891.00671.0125
DEPI 1.04171.01831.03190.99981.0091.06661.06351.0741.04740.9958
SGAI 0.99381.00691.00881.006611.01421.00910.99871.00960.9924
LVGI 1.00160.9910.98930.96360.98231.03421.05491.07041.05291.0511
TATA -0.0056-0.0176-0.0261-0.0256-0.0208-0.0151-0.0232-0.0187-0.0326-0.0419
M-score -2.39-2.50-2.55-2.56-2.55-2.58-2.71-2.65-2.74-2.75
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