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Newell Brands Inc (NYSE:NWL)
Beneish M-Score
-1.20 (As of Today)

Warning Sign:

Beneish M-Score -1.2 higher than -2.22, which implies that it might have manipulated its financial results.

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.

Newell Brands Inc has a M-score of -1.20 signals that the company is a manipulator.

NWL' s Beneish M-Score Range Over the Past 10 Years
Min: -3.42   Max: -1.2
Current: -1.2

-3.42
-1.2

During the past 13 years, the highest Beneish M-Score of Newell Brands Inc was -1.20. The lowest was -3.42. And the median was -2.64.


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 Newell Brands 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 * 1.3025+0.528 * 1.1939+0.404 * 1.367+0.892 * 1.8176+0.115 * 1.1858
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9393+4.679 * -0.0199-0.327 * 0.7504
=-1.20

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $2,773 Mil.
Revenue was 3954.6 + 3858.6 + 1314.9 + 1560.8 = $10,689 Mil.
Gross Profit was 1274.8 + 1095.7 + 505.6 + 597.2 = $3,473 Mil.
Total Current Assets was $7,881 Mil.
Total Assets was $34,416 Mil.
Property, Plant and Equipment(Net PPE) was $1,514 Mil.
Depreciation, Depletion and Amortization(DDA) was $350 Mil.
Selling, General & Admin. Expense(SGA) was $2,727 Mil.
Total Current Liabilities was $4,067 Mil.
Long-Term Debt was $12,043 Mil.
Net Income was 186.5 + 135.2 + 40.5 + 13.2 = $375 Mil.
Non Operating Income was 0.7 + 159.3 + -44.4 + -169.6 = $-54 Mil.
Cash Flow from Operations was 511.4 + 596.5 + -270.9 + 277.7 = $1,115 Mil.
Accounts Receivable was $1,171 Mil.
Revenue was 1530 + 1560.9 + 1264 + 1526 = $5,881 Mil.
Gross Profit was 598.9 + 621 + 487.5 + 574.1 = $2,282 Mil.
Total Current Assets was $2,586 Mil.
Total Assets was $6,794 Mil.
Property, Plant and Equipment(Net PPE) was $594 Mil.
Depreciation, Depletion and Amortization(DDA) was $170 Mil.
Selling, General & Admin. Expense(SGA) was $1,597 Mil.
Total Current Liabilities was $2,141 Mil.
Long-Term Debt was $2,097 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)
=(2772.9 / 10688.9) / (1171.3 / 5880.9)
=0.25941865 / 0.1991702
=1.3025

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)
=(2281.5 / 5880.9) / (3473.3 / 10688.9)
=0.38795082 / 0.32494457
=1.1939

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 - (7880.5 + 1513.7) / 34415.5) / (1 - (2586.4 + 594.1) / 6793.9)
=0.72703578 / 0.53185946
=1.367

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
=10688.9 / 5880.9
=1.8176

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))
=(170.3 / (170.3 + 594.1)) / (350.2 / (350.2 + 1513.7))
=0.22278912 / 0.18788562
=1.1858

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)
=(2727.1 / 10688.9) / (1597.3 / 5880.9)
=0.25513383 / 0.27160809
=0.9393

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)
=((12043.3 + 4066.5) / 34415.5) / ((2097 + 2141.2) / 6793.9)
=0.46809722 / 0.62382431
=0.7504

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
=(375.4 - -54 - 1114.7) / 34415.5
=-0.0199

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.

Newell Brands Inc has a M-score of -1.20 signals that the company is likely to 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 local exchange's currency.

Newell Brands Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.92691.01370.82291.07011.10021.03081.11080.9761.10580.97
GMI 0.92120.94761.07360.8930.96760.99621.00281.00310.9850.9876
AQI 1.01081.02261.10911.02811.02490.96120.96990.98091.05820.9014
SGI 1.08461.03331.00990.8621.01450.97410.99941.01791.02141.0329
DEPI 0.89131.00540.90810.96860.94661.08351.00230.99411.04231.5726
SGAI 1.11111.02811.03991.06121.03821.00850.98740.97961.08151.0183
LVGI 0.93490.9181.13850.91710.99090.96730.93511.02161.12481.06
TATA -0.0394-0.0271-0.066-0.0484-0.0123-0.0678-0.0334-0.0185-0.0265-0.0044
M-score -2.70-2.56-2.92-2.80-2.45-2.79-2.52-2.58-2.52-2.50

Newell Brands Inc Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 0.99461.07491.11371.0531.02610.97430.971.09181.55721.3025
GMI 1.00040.98780.98980.98180.98180.98760.98760.99341.14381.1939
AQI 1.01311.02911.05821.01941.00950.97980.90140.50231.4031.367
SGI 1.0181.01961.01421.02781.03321.03791.03291.03291.41621.8176
DEPI 1.05161.03861.04231.01640.98771.01711.57261.02442.21451.1858
SGAI 1.00581.0461.07261.07411.07941.04941.01831.00460.96850.9393
LVGI 1.00041.12271.12481.16651.14951.0981.061.33250.75810.7504
TATA -0.0139-0.0203-0.022-0.0183-0.0218-0.0204-0.00440.0075-0.0164-0.0199
M-score -2.52-2.53-2.50-2.56-2.60-2.62-2.50-2.64-1.21-1.20
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