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Sears Holdings Corp (NAS:SHLD)
Beneish M-Score
-2.66 (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 -2.66 suggests that the company is not a manipulator.

SHLD' s 10-Year Beneish M-Score Range
Min: -4.27   Max: 8.32
Current: -2.66

-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 -2.68.


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 * 1.0287+0.528 * 1.0103+0.404 * 1.1403+0.892 * 0.8199+0.115 * 1.0571
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0295+4.679 * -0.0172-0.327 * 1.0748
=-2.66

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

This Year (Apr15) TTM:Last Year (Apr14) TTM:
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 $13,290 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 $6,039 Mil.
Long-Term Debt was $3,101 Mil.
Net Income was -303 + -159 + -548 + -573 = $-1,583 Mil.
Non Operating Income was 1 + 0 + 2 + 5 = $8 Mil.
Cash Flow from Operations was -535 + 555 + -1195 + -187 = $-1,362 Mil.
Accounts Receivable was $562 Mil.
Revenue was 7879 + 10593 + 8272 + 8871 = $35,615 Mil.
Gross Profit was 1828 + 2482 + 1931 + 2186 = $8,427 Mil.
Total Current Assets was $8,527 Mil.
Total Assets was $16,930 Mil.
Property, Plant and Equipment(Net PPE) was $5,190 Mil.
Depreciation, Depletion and Amortization(DDA) was $696 Mil.
Selling, General & Admin. Expense(SGA) was $9,255 Mil.
Total Current Liabilities was $8,012 Mil.
Long-Term Debt was $2,821 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)
=(474 / 29201) / (562 / 35615)
=0.01623232 / 0.01577987
=1.0287

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)
=(1978 / 35615) / (1518 / 29201)
=0.23661379 / 0.23420431
=1.0103

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 - (6063 + 4351) / 13290) / (1 - (8527 + 5190) / 16930)
=0.21640331 / 0.18978145
=1.1403

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
=29201 / 35615
=0.8199

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))
=(696 / (696 + 5190)) / (548 / (548 + 4351))
=0.11824669 / 0.11185956
=1.0571

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)
=(7812 / 29201) / (9255 / 35615)
=0.26752508 / 0.25986242
=1.0295

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)
=((3101 + 6039) / 13290) / ((2821 + 8012) / 16930)
=0.68773514 / 0.63987005
=1.0748

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
=(-1583 - 8 - -1362) / 13290
=-0.0172

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 -2.66 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 -0.0283-0.0413-0.04880.001-0.1358-0.0352-0.0141-0.0226
M-score -2.67-2.48-2.92-2.45-3.17-2.77-2.64-2.81

Sears Holdings Corp Quarterly Data

Jan13Apr13Jul13Oct13Jan14Apr14Jul14Oct14Jan15Apr15
DSRI 0.95290.99881.19060.86130.95911.01310.89031.13390.89981.0287
GMI 0.96670.9941.02341.04231.09041.09381.10521.09741.05581.0103
AQI 0.97510.98940.97540.99181.02910.91230.93721.00511.02481.1403
SGI 0.95880.94530.94620.94450.9080.91240.90420.890.86210.8199
DEPI 0.95210.95250.96531.00731.00921.02931.05010.97931.03451.0571
SGAI 1.04261.04111.04161.03340.96950.97230.97640.9871.01611.0295
LVGI 1.01331.05541.07211.07051.12681.1531.18591.18841.15251.0748
TATA -0.0352-0.0255-0.0293-0.0422-0.0141-0.0314-0.0445-0.0335-0.0226-0.0172
M-score -2.77-2.69-2.52-2.86-2.64-2.72-2.90-2.62-2.81-2.66
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