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Sears Holdings Corp (NAS:SHLD)
Beneish M-Score
-2.31 (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 -2.31 suggests that the company is not a manipulator.

SHLD' s 10-Year Beneish M-Score Range
Min: -4.27   Max: 8.32
Current: -2.31

-4.27
8.32

During the past 12 years, the highest Beneish M-Score of Sears Holdings Corp was 8.32. The lowest was -4.27. And the median was -2.67.


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 * 1.1309+0.528 * 0.9634+0.404 * 1.1243+0.892 * 0.7883+0.115 * 0.7305
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0319+4.679 * 0.0507-0.327 * 0.9699
=-2.31

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

This Year (Jul15) TTM:Last Year (Jul14) TTM:
Accounts Receivable was $460 Mil.
Revenue was 6211 + 5882 + 8099 + 7207 = $27,399 Mil.
Gross Profit was 1435 + 1518 + 1978 + 1601 = $6,532 Mil.
Total Current Assets was $7,577 Mil.
Total Assets was $13,186 Mil.
Property, Plant and Equipment(Net PPE) was $2,732 Mil.
Depreciation, Depletion and Amortization(DDA) was $510 Mil.
Selling, General & Admin. Expense(SGA) was $7,388 Mil.
Total Current Liabilities was $5,485 Mil.
Long-Term Debt was $3,068 Mil.
Net Income was 208 + -303 + -159 + -548 = $-802 Mil.
Non Operating Income was -1 + 1 + 0 + 2 = $2 Mil.
Cash Flow from Operations was -297 + -535 + 555 + -1195 = $-1,472 Mil.
Accounts Receivable was $516 Mil.
Revenue was 8013 + 7879 + 10593 + 8272 = $34,757 Mil.
Gross Profit was 1742 + 1828 + 2482 + 1931 = $7,983 Mil.
Total Current Assets was $8,157 Mil.
Total Assets was $16,438 Mil.
Property, Plant and Equipment(Net PPE) was $5,091 Mil.
Depreciation, Depletion and Amortization(DDA) was $661 Mil.
Selling, General & Admin. Expense(SGA) was $9,082 Mil.
Total Current Liabilities was $8,178 Mil.
Long-Term Debt was $2,815 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)
=(460 / 27399) / (516 / 34757)
=0.01678893 / 0.01484593
=1.1309

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)
=(1518 / 34757) / (1435 / 27399)
=0.22968035 / 0.23840286
=0.9634

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 - (7577 + 2732) / 13186) / (1 - (8157 + 5091) / 16438)
=0.21818595 / 0.19406254
=1.1243

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
=27399 / 34757
=0.7883

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))
=(661 / (661 + 5091)) / (510 / (510 + 2732))
=0.11491655 / 0.1573103
=0.7305

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)
=(7388 / 27399) / (9082 / 34757)
=0.26964488 / 0.26129988
=1.0319

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)
=((3068 + 5485) / 13186) / ((2815 + 8178) / 16438)
=0.6486425 / 0.66875532
=0.9699

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
=(-802 - 2 - -1472) / 13186
=0.0507

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 -2.31 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 0.91411.22250.82521.09091.03530.95290.95910.8998
GMI 1.0331.02540.97511.01481.0720.96671.09041.0558
AQI 1.13231.10050.99111.0250.91180.97511.02911.0248
SGI 0.95640.92240.94170.96870.97430.95880.9080.8621
DEPI 1.05310.97871.00840.98370.94960.95211.00921.0345
SGAI 1.0361.04551.02291.01011.04991.04260.96951.0161
LVGI 1.04130.94570.94521.13611.17181.01331.12681.1525
TATA -0.0283-0.0413-0.04880.001-0.1358-0.0352-0.0232-0.0226
M-score -2.67-2.48-2.92-2.45-3.17-2.77-2.68-2.81

Sears Holdings Corp Quarterly Data

Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15Apr15Jul15
DSRI 0.99881.19060.86130.95911.01310.89031.13390.89981.02871.1309
GMI 0.9941.02341.04231.09041.09381.10521.09741.05581.01030.9634
AQI 0.98940.97540.99181.02910.91230.93721.00511.02481.14031.1243
SGI 0.94530.94620.94450.9080.91240.90420.890.86210.81990.7883
DEPI 0.95250.96531.00731.00921.02931.05010.97931.03451.05710.7305
SGAI 1.04111.04161.03340.96950.97230.97640.9871.01611.02951.0319
LVGI 1.05541.07211.07051.12681.1531.18591.18841.15251.07480.9699
TATA -0.0255-0.0293-0.0422-0.0141-0.0314-0.0445-0.0335-0.0226-0.01720.0507
M-score -2.69-2.52-2.86-2.64-2.72-2.90-2.62-2.81-2.66-2.31
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