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GuruFocus has detected 4 Warning Signs with Steelcase Inc $SCS.
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Steelcase Inc (NYSE:SCS)
Beneish M-Score
-2.69 (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 -2.69 suggests that the company is not a manipulator.

SCS' s Beneish M-Score Range Over the Past 10 Years
Min: -3.29   Max: -2.36
Current: -2.69

-3.29
-2.36

During the past 13 years, the highest Beneish M-Score of Steelcase Inc was -2.36. The lowest was -3.29. 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 * 0.9619+0.528 * 0.9524+0.404 * 0.9945+0.892 * 0.991+0.115 * 1.0692
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0338+4.679 * -0.033-0.327 * 0.9666
=-2.69

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

This Year (Feb17) TTM:Last Year (Feb16) TTM:
Accounts Receivable was $308 Mil.
Revenue was 769.1 + 786.5 + 758 + 718.8 = $3,032 Mil.
Gross Profit was 255.7 + 261.9 + 263.1 + 229.8 = $1,011 Mil.
Total Current Assets was $819 Mil.
Total Assets was $1,792 Mil.
Property, Plant and Equipment(Net PPE) was $408 Mil.
Depreciation, Depletion and Amortization(DDA) was $60 Mil.
Selling, General & Admin. Expense(SGA) was $809 Mil.
Total Current Liabilities was $523 Mil.
Long-Term Debt was $295 Mil.
Net Income was 25.8 + 41.2 + 38.2 + 19.4 = $125 Mil.
Non Operating Income was 3.9 + 4.5 + 2.1 + 2.6 = $13 Mil.
Cash Flow from Operations was 66.7 + 83.9 + 85.8 + -65.7 = $171 Mil.
Accounts Receivable was $323 Mil.
Revenue was 747.9 + 787.6 + 819 + 705.5 = $3,060 Mil.
Gross Profit was 234.3 + 253.5 + 266.8 + 216.6 = $971 Mil.
Total Current Assets was $824 Mil.
Total Assets was $1,809 Mil.
Property, Plant and Equipment(Net PPE) was $412 Mil.
Depreciation, Depletion and Amortization(DDA) was $66 Mil.
Selling, General & Admin. Expense(SGA) was $790 Mil.
Total Current Liabilities was $558 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)
=(307.6 / 3032.4) / (322.7 / 3060)
=0.10143781 / 0.10545752
=0.9619

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)
=(971.2 / 3060) / (1010.5 / 3032.4)
=0.31738562 / 0.3332344
=0.9524

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 - (819.2 + 408.1) / 1792) / (1 - (823.9 + 411.6) / 1808.6)
=0.31512277 / 0.31687493
=0.9945

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
=3032.4 / 3060
=0.991

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))
=(65.7 / (65.7 + 411.6)) / (60.3 / (60.3 + 408.1))
=0.13764928 / 0.12873612
=1.0692

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)
=(809.3 / 3032.4) / (790 / 3060)
=0.26688432 / 0.25816993
=1.0338

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)
=((294.6 + 523.4) / 1792) / ((296.6 + 557.5) / 1808.6)
=0.45647321 / 0.47224372
=0.9666

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
=(124.6 - 13.1 - 170.7) / 1792
=-0.033

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 -2.69 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

Feb08Feb09Feb10Feb11Feb12Feb13Feb14Feb15Feb16Feb17
DSRI 1.01950.75861.20191.05090.88771.01461.02491.03670.9910.9619
GMI 0.95291.10761.02260.96310.99970.97550.95461.05630.94330.9525
AQI 1.15980.96481.15540.85671.17330.87990.80661.13891.04490.9945
SGI 1.10440.93070.71981.06341.12821.04341.04191.02371.00010.991
DEPI 1.08280.96531.10720.96471.12260.98711.03191.03010.96831.0692
SGAI 0.95221.03541.06870.95890.94950.98380.99940.99111.02851.0338
LVGI 1.17921.00180.95621.22330.86841.02071.04371.0050.98640.9666
TATA -0.056-0.067-0.0008-0.0358-0.0331-0.0958-0.0522-0.0046-0.0187-0.0331
M-score -2.63-3.05-2.46-2.69-2.49-2.94-2.78-2.36-2.59-2.69

Steelcase Inc Quarterly Data

Nov14Feb15May15Aug15Nov15Feb16May16Aug16Nov16Feb17
DSRI 0.93581.03671.03081.06360.9850.9910.97640.90160.96260.9619
GMI 1.0271.05631.06661.0420.96270.94330.92720.92510.9590.9524
AQI 1.03361.13891.03881.00140.95891.04491.13721.1921.21130.9945
SGI 1.0541.02370.99911.00010.99121.00011.01030.97980.98340.991
DEPI 1.0661.03011.0280.99340.96730.96830.9940.9881.05381.0692
SGAI 0.9780.99110.99751.0041.01021.02851.04161.0641.06891.0338
LVGI 1.00921.0051.0260.9990.98030.98640.93170.93520.95310.9666
TATA -0.0041-0.0046-0.0268-0.0401-0.056-0.0187-0.00290.0003-0.0008-0.033
M-score -2.47-2.36-2.53-2.59-2.80-2.59-2.47-2.54-2.46-2.69
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