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Sears Holdings Corp (NAS:SHLD)
Beneish M-Score
-2.67 (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 -2.67 suggests that the company is not a manipulator.

SHLD' s 10-Year Beneish M-Score Range
Min: -4.27   Max: 8.32
Current: -2.67

-4.27
8.32

During the past 11 years, the highest Beneish M-Score of Sears Holdings Corp was 8.32. The lowest was -4.27. And the median was -2.69.


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 * 1.1339+0.528 * 1.0974+0.404 * 1.0051+0.892 * 0.89+0.115 * 0.9793
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.987+4.679 * -0.0444-0.327 * 1.1884
=-2.67

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

This Year (Oct14) TTM:Last Year (Oct13) TTM:
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.
Net Income was -548 + -573 + -402 + -358 = $-1,881 Mil.
Non Operating Income was 2 + 5 + -3 + 168 = $172 Mil.
Cash Flow from Operations was -1195 + -187 + -560 + 563 = $-1,379 Mil.
Accounts Receivable was $541 Mil.
Revenue was 8272 + 8871 + 8452 + 12260 = $37,855 Mil.
Gross Profit was 1931 + 2186 + 2156 + 3163 = $9,436 Mil.
Total Current Assets was $10,528 Mil.
Total Assets was $20,209 Mil.
Property, Plant and Equipment(Net PPE) was $5,682 Mil.
Depreciation, Depletion and Amortization(DDA) was $764 Mil.
Selling, General & Admin. Expense(SGA) was $10,053 Mil.
Total Current Liabilities was $9,675 Mil.
Long-Term Debt was $2,862 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)
=(546 / 33692) / (541 / 37855)
=0.01620563 / 0.01429137
=1.1339

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)
=(1742 / 37855) / (1601 / 33692)
=0.24926694 / 0.22714591
=1.0974

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 - (7591 + 4561) / 15169) / (1 - (10528 + 5682) / 20209)
=0.19889248 / 0.19788213
=1.0051

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
=33692 / 37855
=0.89

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))
=(764 / (764 + 5682)) / (628 / (628 + 4561))
=0.11852312 / 0.12102525
=0.9793

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)
=(8831 / 33692) / (10053 / 37855)
=0.2621097 / 0.26556598
=0.987

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)
=((2769 + 8414) / 15169) / ((2862 + 9675) / 20209)
=0.73722724 / 0.62036716
=1.1884

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
=(-1881 - 172 - -1379) / 15169
=-0.0444

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 -2.67 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

Jan05Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14
DSRI 0.91411.22250.82521.09091.03530.95290.9591
GMI 1.0331.02540.97511.01481.0720.96671.0904
AQI 1.13231.10050.99111.0250.91180.97511.0291
SGI 0.95640.92240.94170.96870.97430.95880.908
DEPI 1.05310.97871.00840.98370.94960.95211.0092
SGAI 1.0361.04551.02291.01011.04991.04260.9695
LVGI 1.04130.94570.94521.13611.17181.01331.1268
TATA -0.0283-0.0413-0.04880.001-0.1358-0.0352-0.0232
M-score -2.67-2.48-2.92-2.45-3.17-2.77-2.68

Sears Holdings Corp Quarterly Data

Jul12Oct12Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14
DSRI 0.74931.05130.95290.99881.19060.86130.95911.01310.89031.1339
GMI 1.02641.01790.96670.9941.02341.04231.09041.09381.10521.0974
AQI 0.94670.93020.97510.98940.97540.99181.02910.91230.93721.0051
SGI 0.9710.96420.95880.94530.94620.94450.9080.91240.90420.89
DEPI 0.91880.90280.95210.95250.96531.00731.00921.02931.05010.9793
SGAI 1.03641.02931.04261.04111.04161.03340.96950.97230.97640.987
LVGI 1.10371.07971.01331.05541.07211.07051.12681.1531.18591.1884
TATA -0.1383-0.1211-0.0352-0.0255-0.0293-0.0422-0.0232-0.0412-0.0546-0.0444
M-score -3.44-3.09-2.77-2.69-2.52-2.86-2.68-2.77-2.94-2.67
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