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Sears Holdings Corp (NAS:SHLD)
Beneish M-Score
-2.25 (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.

Sears Holdings Corp has a M-score of -2.25 suggests that the company is not a manipulator.

SHLD' s Beneish M-Score Range Over the Past 10 Years
Min: -3.44   Max: 6.03
Current: -2.25

-3.44
6.03

During the past 12 years, the highest Beneish M-Score of Sears Holdings Corp was 6.03. The lowest was -3.44. And the median was -2.63.


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 Sears Holdings Corp 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 * 1.1299+0.528 * 0.9515+0.404 * 1.1348+0.892 * 0.77+0.115 * 0.8291
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0305+4.679 * 0.0619-0.327 * 0.9354
=-2.25

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

This Year (Oct15) TTM:Last Year (Oct14) TTM:
Accounts Receivable was $475 Mil.
Revenue was 5750 + 6211 + 5882 + 8099 = $25,942 Mil.
Gross Profit was 1262 + 1435 + 1518 + 1978 = $6,193 Mil.
Total Current Assets was $7,219 Mil.
Total Assets was $12,769 Mil.
Property, Plant and Equipment(Net PPE) was $2,668 Mil.
Depreciation, Depletion and Amortization(DDA) was $456 Mil.
Selling, General & Admin. Expense(SGA) was $7,007 Mil.
Total Current Liabilities was $6,518 Mil.
Long-Term Debt was $2,288 Mil.
Net Income was -454 + 208 + -303 + -159 = $-708 Mil.
Non Operating Income was 0 + -1 + 1 + 0 = $0 Mil.
Cash Flow from Operations was -1222 + -297 + -535 + 555 = $-1,499 Mil.
Accounts Receivable was $546 Mil.
Revenue was 7207 + 8013 + 7879 + 10593 = $33,692 Mil.
Gross Profit was 1601 + 1742 + 1828 + 2482 = $7,653 Mil.
Total Current Assets was $7,591 Mil.
Total Assets was $15,169 Mil.
Property, Plant and Equipment(Net PPE) was $4,561 Mil.
Depreciation, Depletion and Amortization(DDA) was $628 Mil.
Selling, General & Admin. Expense(SGA) was $8,831 Mil.
Total Current Liabilities was $8,414 Mil.
Long-Term Debt was $2,769 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)
=(475 / 25942) / (546 / 33692)
=0.01831008 / 0.01620563
=1.1299

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)
=(1435 / 33692) / (1262 / 25942)
=0.22714591 / 0.23872485
=0.9515

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 - (7219 + 2668) / 12769) / (1 - (7591 + 4561) / 15169)
=0.22570287 / 0.19889248
=1.1348

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
=25942 / 33692
=0.77

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))
=(628 / (628 + 4561)) / (456 / (456 + 2668))
=0.12102525 / 0.14596671
=0.8291

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)
=(7007 / 25942) / (8831 / 33692)
=0.27010254 / 0.2621097
=1.0305

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)
=((2288 + 6518) / 12769) / ((2769 + 8414) / 15169)
=0.68963897 / 0.73722724
=0.9354

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
=(-708 - 0 - -1499) / 12769
=0.0619

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.

Sears Holdings Corp has a M-score of -2.25 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.

Sears Holdings Corp Annual Data

Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15
DSRI 0.50370.97880.91411.22250.82521.09091.03530.95290.95910.8998
GMI 0.89080.96761.0331.02540.97511.01481.0720.96671.09041.0558
AQI 1.97291.01921.13231.10050.99111.0250.91180.97511.02911.0248
SGI 2.49231.0720.95640.92240.94170.96870.97430.95880.9080.8621
DEPI 2.05340.78521.05310.97871.00840.98370.94960.95211.00921.0345
SGAI 1.09280.99121.0361.04551.02291.01011.04991.04260.96951.0161
LVGI 1.57470.95751.04130.94570.94521.13611.17181.01331.12681.1525
TATA -0.0608-0.0099-0.0283-0.0413-0.04880.001-0.1358-0.0352-0.0141-0.0226
M-score -1.64-2.50-2.67-2.48-2.92-2.45-3.17-2.77-2.64-2.81

Sears Holdings Corp Quarterly Data

Jul13Oct13Jan14Apr14Jul14Oct14Jan15Apr15Jul15Oct15
DSRI 1.19060.86130.95911.01310.89031.13390.89981.02871.13091.1299
GMI 1.02341.04231.09041.09381.10521.09741.05581.01030.96340.9515
AQI 0.97540.99181.02910.91230.93721.00511.02481.14031.12431.1348
SGI 0.94620.94450.9080.91240.90420.890.86210.81990.78830.77
DEPI 0.96531.00731.00921.02931.05010.97931.03451.05710.73050.8291
SGAI 1.04161.03340.96950.97230.97640.9871.01611.02951.03191.0305
LVGI 1.07211.07051.12681.1531.18591.18841.15251.07480.96990.9354
TATA -0.0293-0.0422-0.0141-0.0314-0.0445-0.0335-0.0226-0.01720.05070.0619
M-score -2.52-2.86-2.64-2.72-2.90-2.62-2.81-2.66-2.31-2.25
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