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McCormick & Company Inc (NYSE:MKC)
Beneish M-Score
-2.57 (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 -2.57 suggests that the company is not a manipulator.

MKC' s 10-Year Beneish M-Score Range
Min: -3.04   Max: -2.03
Current: -2.57

-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 * 1.0052+0.528 * 0.987+0.404 * 0.983+0.892 * 1.0376+0.115 * 0.9998
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0066+4.679 * -0.0265-0.327 * 0.9636
=-2.57

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

This Year (May14) TTM:Last Year (May13) TTM:
Accounts Receivable was $417 Mil.
Revenue was 1033.4 + 993.4 + 1170 + 1016.4 = $4,213 Mil.
Gross Profit was 412.5 + 391.5 + 502.2 + 407.6 = $1,714 Mil.
Total Current Assets was $1,325 Mil.
Total Assets was $4,409 Mil.
Property, Plant and Equipment(Net PPE) was $575 Mil.
Depreciation, Depletion and Amortization(DDA) was $108 Mil.
Selling, General & Admin. Expense(SGA) was $1,105 Mil.
Total Current Liabilities was $1,003 Mil.
Long-Term Debt was $1,017 Mil.
Net Income was 84.5 + 82.5 + 127.6 + 104.6 = $399 Mil.
Non Operating Income was 0.3 + 0.2 + 0.5 + 0.3 = $1 Mil.
Cash Flow from Operations was 105.4 + 76.7 + 237.8 + 94.7 = $515 Mil.
Accounts Receivable was $400 Mil.
Revenue was 1002.6 + 934.4 + 1145.8 + 977.7 = $4,061 Mil.
Gross Profit was 394.4 + 361.7 + 482.4 + 391.7 = $1,630 Mil.
Total Current Assets was $1,218 Mil.
Total Assets was $4,209 Mil.
Property, Plant and Equipment(Net PPE) was $554 Mil.
Depreciation, Depletion and Amortization(DDA) was $104 Mil.
Selling, General & Admin. Expense(SGA) was $1,058 Mil.
Total Current Liabilities was $1,226 Mil.
Long-Term Debt was $774 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)
=(417.1 / 4213.2) / (399.9 / 4060.5)
=0.09899839 / 0.09848541
=1.0052

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)
=(391.5 / 4060.5) / (412.5 / 4213.2)
=0.40147765 / 0.4067692
=0.987

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 - (1324.7 + 575) / 4409.3) / (1 - (1217.5 + 554.3) / 4208.8)
=0.56916064 / 0.5790249
=0.983

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
=4213.2 / 4060.5
=1.0376

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))
=(103.9 / (103.9 + 554.3)) / (107.8 / (107.8 + 575))
=0.15785476 / 0.15787932
=0.9998

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)
=(1104.7 / 4213.2) / (1057.7 / 4060.5)
=0.26219975 / 0.26048516
=1.0066

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)
=((1016.8 + 1002.8) / 4409.3) / ((774.4 + 1226.2) / 4208.8)
=0.45803189 / 0.47533739
=0.9636

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
=(399.2 - 1.3 - 514.6) / 4409.3
=-0.0265

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 -2.57 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

Feb12May12Aug12Nov12Feb13May13Aug13Nov13Feb14May14
DSRI 1.02380.96790.94091.0051.0021.02181.09161.03541.02411.0052
GMI 1.05531.04831.02931.02171.00911.00811.01040.99750.99110.987
AQI 1.02241.02911.03390.97760.98941.00230.97751.00440.99190.983
SGI 1.1391.13991.11581.08561.05771.03541.03021.02721.03481.0376
DEPI 1.01280.99841.00351.00040.99141.04631.04171.01831.03190.9998
SGAI 0.96530.97620.97950.97490.98210.98880.99381.00691.00881.0066
LVGI 1.07121.07211.05670.95410.94970.97771.00160.9910.98930.9636
TATA -0.004-0.0178-0.0296-0.0125-0.0145-0.0099-0.0056-0.0181-0.0268-0.0265
M-score -2.33-2.45-2.56-2.44-2.48-2.45-2.39-2.50-2.55-2.57
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