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McCormick & Co Inc (NYSE:MKC)
Beneish M-Score
-2.66 (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 & Co Inc has a M-score of -2.67 suggests that the company is not a manipulator.

MKC' s Beneish M-Score Range Over the Past 10 Years
Min: -3.04   Max: -1.94
Current: -2.66

-3.04
-1.94

During the past 13 years, the highest Beneish M-Score of McCormick & Co Inc was -1.94. 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 & Co 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 * 0.9539+0.528 * 0.9991+0.404 * 1.0252+0.892 * 1.0131+0.115 * 0.9869
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9971+4.679 * -0.0341-0.327 * 1.0107
=-2.67

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

This Year (Feb16) TTM:Last Year (Feb15) TTM:
Accounts Receivable was $371 Mil.
Revenue was 1030.2 + 1201.9 + 1059.9 + 1024.1 = $4,316 Mil.
Gross Profit was 405 + 521.7 + 421.9 + 404 = $1,753 Mil.
Total Current Assets was $1,306 Mil.
Total Assets was $4,400 Mil.
Property, Plant and Equipment(Net PPE) was $609 Mil.
Depreciation, Depletion and Amortization(DDA) was $107 Mil.
Selling, General & Admin. Expense(SGA) was $1,134 Mil.
Total Current Liabilities was $1,092 Mil.
Long-Term Debt was $1,056 Mil.
Net Income was 94.1 + 149.2 + 95.7 + 85.5 = $425 Mil.
Non Operating Income was 1.1 + 0.5 + 0.2 + 0.6 = $2 Mil.
Cash Flow from Operations was 77.9 + 273.4 + 130.7 + 90 = $572 Mil.
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.



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)
=(371.2 / 4316.1) / (384.1 / 4260.2)
=0.08600357 / 0.09016009
=0.9539

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)
=(521.7 / 4260.2) / (405 / 4316.1)
=0.40570865 / 0.40606103
=0.9991

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 - (1306.2 + 609.1) / 4400.1) / (1 - (1304.7 + 580.6) / 4197.5)
=0.56471444 / 0.5508517
=1.0252

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
=4316.1 / 4260.2
=1.0131

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))
=(100.8 / (100.8 + 580.6)) / (107.4 / (107.4 + 609.1))
=0.14793073 / 0.14989532
=0.9869

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)
=(1134.1 / 4316.1) / (1122.7 / 4260.2)
=0.26276036 / 0.26353223
=0.9971

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)
=((1056.3 + 1092.2) / 4400.1) / ((806.8 + 1221) / 4197.5)
=0.48828436 / 0.48309708
=1.0107

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
=(424.5 - 2.4 - 572) / 4400.1
=-0.0341

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 & Co Inc has a M-score of -2.67 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 & Co 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 -0.0451-0.0011-0.0238-0.0349-0.00570.0076-0.0119-0.0173-0.0146-0.0419
M-score -2.70-2.28-2.71-2.63-2.46-2.33-2.43-2.50-2.58-2.75

McCormick & Co Inc Quarterly Data

Nov13Feb14May14Aug14Nov14Feb15May15Aug15Nov15Feb16
DSRI 1.03541.02411.00520.9970.9680.8810.92820.88110.91080.9539
GMI 0.99750.99110.9870.98620.99080.99931.00541.00941.00840.9991
AQI 1.00440.99190.9830.99420.96470.96880.97491.01291.0151.0252
SGI 1.02721.03481.03761.03431.02911.01861.00891.00671.01251.0131
DEPI 1.01831.03190.99981.0091.06661.06351.0741.04740.99580.9869
SGAI 1.00691.00881.006611.01421.00910.99871.00960.99240.9971
LVGI 0.9910.98930.96360.98231.03421.05491.07041.05291.05111.0107
TATA -0.0173-0.0258-0.0253-0.0205-0.0146-0.0226-0.0182-0.0321-0.0419-0.0341
M-score -2.50-2.55-2.56-2.55-2.58-2.70-2.64-2.74-2.75-2.67
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