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McCormick & Company, Inc. (NYSE:MKC)
Beneish M-Score
-2.55 (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 -2.55 suggests that the company is not a manipulator.

MKC' s 10-Year Beneish M-Score Range
Min: -3.04   Max: -2.03
Current: -2.55

-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 * 1.0241+0.528 * 0.9911+0.404 * 0.9919+0.892 * 1.0348+0.115 * 1.0319
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0088+4.679 * -0.0267-0.327 * 0.9893
=-2.55

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

This Year (Feb14) TTM:Last Year (Feb13) TTM:
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.
Net Income was 82.5 + 127.6 + 104.6 + 79 = $394 Mil.
Non Operating Income was 0.2 + 0.5 + 0.3 + 0.8 = $2 Mil.
Cash Flow from Operations was 76.7 + 237.8 + 94.7 + 101.1 = $510 Mil.
Accounts Receivable was $404 Mil.
Revenue was 934.4 + 1145.8 + 977.7 + 984 = $4,042 Mil.
Gross Profit was 361.7 + 482.4 + 391.7 + 388.4 = $1,624 Mil.
Total Current Assets was $1,212 Mil.
Total Assets was $4,086 Mil.
Property, Plant and Equipment(Net PPE) was $533 Mil.
Depreciation, Depletion and Amortization(DDA) was $103 Mil.
Selling, General & Admin. Expense(SGA) was $1,046 Mil.
Total Current Liabilities was $1,116 Mil.
Long-Term Debt was $776 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)
=(428 / 4182.4) / (403.9 / 4041.9)
=0.10233359 / 0.09992825
=1.0241

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)
=(502.2 / 4041.9) / (391.5 / 4182.4)
=0.40184072 / 0.40543707
=0.9911

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 - (1340.1 + 571) / 4429.7) / (1 - (1211.5 + 532.5) / 4086.1)
=0.56857124 / 0.57318715
=0.9919

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
=4182.4 / 4041.9
=1.0348

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))
=(103.2 / (103.2 + 532.5)) / (106.6 / (106.6 + 571))
=0.16234073 / 0.15731995
=1.0319

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)
=(1092.3 / 4182.4) / (1046.4 / 4041.9)
=0.26116584 / 0.25888815
=1.0088

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)
=((1016.6 + 1012.1) / 4429.7) / ((776 + 1115.5) / 4086.1)
=0.45797684 / 0.46291084
=0.9893

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
=(393.7 - 1.8 - 510.3) / 4429.7
=-0.0267

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 -2.55 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 -0.0621-0.0559-0.0632-0.0085-0.0238-0.0349-0.00570.0078-0.0124-0.0179
M-score -2.61-2.81-2.78-2.32-2.71-2.63-2.46-2.33-2.44-2.50

McCormick & Company, Inc. Quarterly Data

Nov11Feb12May12Aug12Nov12Feb13May13Aug13Nov13Feb14
DSRI 0.99651.02380.96790.94091.0051.0021.02181.09161.03541.0241
GMI 1.03191.05531.04831.02931.02171.00911.00811.01040.99750.9911
AQI 1.02261.02241.02911.03390.97760.98941.00230.97751.00440.9919
SGI 1.10811.1391.13991.11581.08561.05771.03541.03021.02721.0348
DEPI 1.0311.01280.99841.00351.00040.99141.04631.04171.01831.0319
SGAI 0.97620.96530.97620.97950.97490.98210.98880.99381.00691.0088
LVGI 1.04811.07121.07211.05670.95410.94970.97771.00160.9910.9893
TATA 0.0078-0.004-0.0178-0.0296-0.0125-0.0145-0.0098-0.0055-0.018-0.0267
M-score -2.33-2.33-2.45-2.56-2.44-2.48-2.45-2.39-2.50-2.55
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