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Sears Holdings Corp (NAS:SHLD)
Beneish M-Score
-2.09 (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 -2.09 signals that the company is a manipulator.

SHLD' s Beneish M-Score Range Over the Past 10 Years
Min: -3.43   Max: 6.25
Current: -2.09

-3.43
6.25

During the past 13 years, the highest Beneish M-Score of Sears Holdings Corp was 6.25. The lowest was -3.43. And the median was -2.65.


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 * 1.0918+0.528 * 1.056+0.404 * 1.0543+0.892 * 0.8444+0.115 * 0.8255
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0125+4.679 * 0.0946-0.327 * 1.0866
=-2.09

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

This Year (Apr16) TTM:Last Year (Apr15) TTM:
Accounts Receivable was $437 Mil.
Revenue was 5394 + 7303 + 5750 + 6211 = $24,658 Mil.
Gross Profit was 1177 + 1595 + 1262 + 1435 = $5,469 Mil.
Total Current Assets was $6,120 Mil.
Total Assets was $11,175 Mil.
Property, Plant and Equipment(Net PPE) was $2,520 Mil.
Depreciation, Depletion and Amortization(DDA) was $395 Mil.
Selling, General & Admin. Expense(SGA) was $6,679 Mil.
Total Current Liabilities was $4,594 Mil.
Long-Term Debt was $3,312 Mil.
Net Income was -471 + -580 + -454 + 208 = $-1,297 Mil.
Non Operating Income was 1 + 0 + 0 + -1 = $0 Mil.
Cash Flow from Operations was -722 + -113 + -1222 + -297 = $-2,354 Mil.
Accounts Receivable was $474 Mil.
Revenue was 5882 + 8099 + 7207 + 8013 = $29,201 Mil.
Gross Profit was 1518 + 1978 + 1601 + 1742 = $6,839 Mil.
Total Current Assets was $6,063 Mil.
Total Assets was $13,269 Mil.
Property, Plant and Equipment(Net PPE) was $4,351 Mil.
Depreciation, Depletion and Amortization(DDA) was $548 Mil.
Selling, General & Admin. Expense(SGA) was $7,812 Mil.
Total Current Liabilities was $5,559 Mil.
Long-Term Debt was $3,080 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)
=(437 / 24658) / (474 / 29201)
=0.01772244 / 0.01623232
=1.0918

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)
=(6839 / 29201) / (5469 / 24658)
=0.23420431 / 0.22179414
=1.056

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 - (6120 + 2520) / 11175) / (1 - (6063 + 4351) / 13269)
=0.22684564 / 0.21516316
=1.0543

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
=24658 / 29201
=0.8444

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))
=(548 / (548 + 4351)) / (395 / (395 + 2520))
=0.11185956 / 0.135506
=0.8255

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)
=(6679 / 24658) / (7812 / 29201)
=0.27086544 / 0.26752508
=1.0125

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)
=((3312 + 4594) / 11175) / ((3080 + 5559) / 13269)
=0.70747204 / 0.6510664
=1.0866

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
=(-1297 - 0 - -2354) / 11175
=0.0946

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 -2.09 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 own currency.

Sears Holdings Corp Annual Data

Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15Jan16
DSRI 0.97240.91411.22250.82521.07421.05140.95290.95910.89981.2118
GMI 0.96741.03311.02540.97511.0121.0750.96671.09041.05580.9918
AQI 1.01921.13231.10050.99111.0250.91180.97511.02911.01821.0772
SGI 1.07910.95640.92240.94170.98370.95940.95880.9080.86210.806
DEPI 0.77821.05220.97871.00840.95350.97970.95211.00921.03450.8356
SGAI 0.99291.03531.04551.02291.00861.05151.04260.96951.01611.035
LVGI 0.95751.04130.94570.94521.13611.17181.01331.12681.09121.0108
TATA -0.0027-0.0269-0.0413-0.04880.0007-0.1339-0.0463-0.0232-0.02270.0916
M-score -2.47-2.67-2.48-2.92-2.46-3.16-2.82-2.68-2.79-2.03

Sears Holdings Corp Quarterly Data

Jan14Apr14Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16
DSRI 0.95911.01310.89031.13390.89981.02871.13091.12991.21181.0918
GMI 1.09041.09381.10521.09741.05581.01030.96340.95150.99181.056
AQI 1.02910.91230.93721.00511.01821.13371.12431.13481.07721.0543
SGI 0.9080.91240.90420.890.86210.81990.78830.770.8060.8444
DEPI 1.00921.02931.05010.97931.03451.05710.73050.82910.83560.8255
SGAI 0.96950.97230.97640.9871.01611.02951.03191.03051.0351.0125
LVGI 1.12681.1531.18591.18841.09121.01750.96990.93541.01081.0866
TATA -0.0252-0.0434-0.0568-0.0469-0.0325-0.0270.04090.05180.09160.0946
M-score -2.69-2.78-2.95-2.68-2.84-2.69-2.35-2.30-2.03-2.09
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