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Sears Holdings Corp (NAS:SHLD)
Beneish M-Score
-2.52 (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 -2.52 suggests that the company is not a manipulator.

SHLD' s Beneish M-Score Range Over the Past 10 Years
Min: -3.43   Max: 6.25
Current: -2.52

-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 -2.63.


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 * 0.9635+0.528 * 1.0857+0.404 * 1.0956+0.892 * 0.88+0.115 * 1.1969
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9951+4.679 * 0.013-0.327 * 1.1987
=-2.52

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

This Year (Jul16) TTM:Last Year (Jul15) TTM:
Accounts Receivable was $390 Mil.
Revenue was 5663 + 5394 + 7303 + 5750 = $24,110 Mil.
Gross Profit was 1260 + 1177 + 1595 + 1262 = $5,294 Mil.
Total Current Assets was $5,625 Mil.
Total Assets was $10,614 Mil.
Property, Plant and Equipment(Net PPE) was $2,465 Mil.
Depreciation, Depletion and Amortization(DDA) was $373 Mil.
Selling, General & Admin. Expense(SGA) was $6,469 Mil.
Total Current Liabilities was $4,953 Mil.
Long-Term Debt was $2,837 Mil.
Net Income was -395 + -471 + -580 + -454 = $-1,900 Mil.
Non Operating Income was -1 + 1 + -63 + 0 = $-63 Mil.
Cash Flow from Operations was 82 + -722 + -113 + -1222 = $-1,975 Mil.
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 $13,167 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 $5,013 Mil.
Long-Term Debt was $3,049 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)
=(390 / 24110) / (460 / 27399)
=0.01617586 / 0.01678893
=0.9635

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)
=(6532 / 27399) / (5294 / 24110)
=0.23840286 / 0.21957694
=1.0857

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 - (5625 + 2465) / 10614) / (1 - (7577 + 2732) / 13167)
=0.23779913 / 0.2170578
=1.0956

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
=24110 / 27399
=0.88

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))
=(510 / (510 + 2732)) / (373 / (373 + 2465))
=0.1573103 / 0.13143058
=1.1969

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)
=(6469 / 24110) / (7388 / 27399)
=0.2683119 / 0.26964488
=0.9951

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)
=((2837 + 4953) / 10614) / ((3049 + 5013) / 13167)
=0.73393631 / 0.6122883
=1.1987

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
=(-1900 - -63 - -1975) / 10614
=0.013

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 -2.52 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

Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14Jan15Jan16
DSRI 0.97880.91411.22250.82521.09091.03530.95290.95910.89981.2118
GMI 0.96761.0331.02540.97511.01481.0720.96671.09041.05580.9918
AQI 1.01921.13231.10050.99111.0250.91180.97511.02911.01821.0772
SGI 1.0720.95640.92240.94170.96870.97430.95880.9080.86210.806
DEPI 0.78521.05310.97871.00840.98370.94960.95211.00921.03450.8356
SGAI 0.99121.0361.04551.02291.01011.04991.04260.96951.01611.035
LVGI 0.95751.04130.94570.94521.13611.17181.01331.12681.09121.0108
TATA -0.0071-0.0269-0.0413-0.0488-0.011-0.1337-0.0325-0.0252-0.03250.0971
M-score -2.49-2.67-2.48-2.92-2.51-3.16-2.76-2.69-2.84-2.01

Sears Holdings Corp Quarterly Data

Apr14Jul14Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16
DSRI 1.01310.89031.13390.89981.02871.13091.12991.21181.09180.9635
GMI 1.09381.10521.09741.05581.01030.96340.95150.99181.0561.0857
AQI 0.91230.93721.00511.01821.13371.11851.13481.07721.05431.0956
SGI 0.91240.90420.890.86210.81990.78830.770.8060.84440.88
DEPI 1.02931.05010.97931.03451.05710.73050.82910.83560.82551.1969
SGAI 0.97230.97640.9871.01611.02951.03191.03051.0351.01250.9951
LVGI 1.1531.18591.18841.09121.01750.91560.93541.01081.08661.1987
TATA -0.0434-0.0568-0.0469-0.0325-0.0270.04090.05180.09710.10020.013
M-score -2.78-2.95-2.68-2.84-2.69-2.34-2.30-2.01-2.06-2.52
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