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GuruFocus has detected 3 Warning Signs with Steelcase Inc $SCS.
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Steelcase Inc (NYSE:SCS)
Beneish M-Score
-2.46 (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.

Steelcase Inc has a M-score of -2.46 suggests that the company is not a manipulator.

SCS' s Beneish M-Score Range Over the Past 10 Years
Min: -3.65   Max: -2.35
Current: -2.46

-3.65
-2.35

During the past 13 years, the highest Beneish M-Score of Steelcase Inc was -2.35. The lowest was -3.65. And the median was -2.70.


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 Steelcase 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 * 0.9626+0.528 * 0.959+0.404 * 1.2113+0.892 * 0.9834+0.115 * 1.0538
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0689+4.679 * -0.0008-0.327 * 0.9531
=-2.46

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

This Year (Nov16) TTM:Last Year (Nov15) TTM:
Accounts Receivable was $328 Mil.
Revenue was 786.5 + 758 + 718.8 + 747.9 = $3,011 Mil.
Gross Profit was 261.9 + 263.1 + 229.8 + 234.3 = $989 Mil.
Total Current Assets was $803 Mil.
Total Assets was $1,773 Mil.
Property, Plant and Equipment(Net PPE) was $401 Mil.
Depreciation, Depletion and Amortization(DDA) was $61 Mil.
Selling, General & Admin. Expense(SGA) was $812 Mil.
Total Current Liabilities was $520 Mil.
Long-Term Debt was $295 Mil.
Net Income was 41.2 + 38.2 + 19.4 + 77.5 = $176 Mil.
Non Operating Income was 4.5 + 2.1 + 2.6 + 8.7 = $18 Mil.
Cash Flow from Operations was 83.9 + 85.8 + -65.7 + 55.9 = $160 Mil.
Accounts Receivable was $347 Mil.
Revenue was 787.6 + 819 + 705.5 + 749.9 = $3,062 Mil.
Gross Profit was 253.5 + 266.8 + 216.6 + 227.6 = $965 Mil.
Total Current Assets was $914 Mil.
Total Assets was $1,791 Mil.
Property, Plant and Equipment(Net PPE) was $403 Mil.
Depreciation, Depletion and Amortization(DDA) was $65 Mil.
Selling, General & Admin. Expense(SGA) was $772 Mil.
Total Current Liabilities was $566 Mil.
Long-Term Debt was $297 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)
=(328.1 / 3011.2) / (346.6 / 3062)
=0.10895988 / 0.11319399
=0.9626

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)
=(964.5 / 3062) / (989.1 / 3011.2)
=0.3149902 / 0.3284737
=0.959

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 - (802.8 + 401.3) / 1773.1) / (1 - (913.7 + 403.1) / 1791.4)
=0.32090689 / 0.26493246
=1.2113

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
=3011.2 / 3062
=0.9834

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))
=(65.1 / (65.1 + 403.1)) / (61 / (61 + 401.3))
=0.13904314 / 0.13194895
=1.0538

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)
=(811.9 / 3011.2) / (772.4 / 3062)
=0.26962673 / 0.25225343
=1.0689

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)
=((294.5 + 520) / 1773.1) / ((297.1 + 566.3) / 1791.4)
=0.45936495 / 0.48196941
=0.9531

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
=(176.3 - 17.9 - 159.9) / 1773.1
=-0.0008

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.

Steelcase Inc has a M-score of -2.46 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 local exchange's currency.

Steelcase Inc Annual Data

Feb07Feb08Feb09Feb10Feb11Feb12Feb13Feb14Feb15Feb16
DSRI 0.85521.01950.75861.20191.05090.88771.01461.02491.03670.991
GMI 0.96390.95291.10761.02260.96310.99970.97550.95461.05630.9433
AQI 0.97871.15980.96481.15540.85671.17330.87990.80661.13891.0449
SGI 1.07961.10440.93070.71981.06341.12821.04341.04191.02371.0001
DEPI 1.05741.08280.96531.10720.96471.12260.98711.03191.03010.9683
SGAI 1.01630.95221.03541.06870.95890.94950.98380.99940.99111.0285
LVGI 1.0421.17921.00180.95621.22330.86841.02071.04371.0050.9864
TATA -0.0738-0.056-0.067-0.0008-0.0358-0.0331-0.0958-0.0522-0.0046-0.0187
M-score -2.93-2.63-3.05-2.46-2.69-2.49-2.94-2.78-2.36-2.59

Steelcase Inc Quarterly Data

Aug14Nov14Feb15May15Aug15Nov15Feb16May16Aug16Nov16
DSRI 0.97790.93581.03671.03081.06360.9850.9910.97640.90160.9626
GMI 0.99361.0271.05631.06661.0420.96270.94330.92720.92510.959
AQI 0.80381.03361.13891.03881.00140.95891.04491.13721.1921.2113
SGI 1.06981.0541.02370.99911.00010.99121.00011.01030.97980.9834
DEPI 1.05491.0661.03011.0280.99340.96730.96830.9940.9881.0538
SGAI 0.96360.9780.99110.99751.0041.01021.02851.04161.0641.0689
LVGI 1.01281.00921.0051.0260.9990.98030.98640.93170.93520.9531
TATA -0.0312-0.0041-0.0046-0.0268-0.0401-0.056-0.0187-0.00290.0003-0.0008
M-score -2.66-2.47-2.36-2.53-2.59-2.80-2.59-2.47-2.54-2.46
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