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Sherwin-Williams Co (NYSE:SHW)
Beneish M-Score
-2.69 (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.

Sherwin-Williams Co has a M-score of -2.69 suggests that the company is not a manipulator.

SHW' s 10-Year Beneish M-Score Range
Min: -3.23   Max: -2.15
Current: -2.69

-3.23
-2.15

During the past 13 years, the highest Beneish M-Score of Sherwin-Williams Co was -2.15. The lowest was -3.23. 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 Sherwin-Williams Co 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 * 0.9436+0.528 * 0.98+0.404 * 1.1387+0.892 * 1.1072+0.115 * 0.9501
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0129+4.679 * -0.0566-0.327 * 1.0829
=-2.69

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $1,409 Mil.
Revenue was 3150.57 + 3042.995 + 2366.556 + 2457.058 = $11,017 Mil.
Gross Profit was 1470.955 + 1409.653 + 1065.901 + 1124.178 = $5,071 Mil.
Total Current Assets was $3,080 Mil.
Total Assets was $6,317 Mil.
Property, Plant and Equipment(Net PPE) was $1,013 Mil.
Depreciation, Depletion and Amortization(DDA) was $197 Mil.
Selling, General & Admin. Expense(SGA) was $3,800 Mil.
Total Current Liabilities was $2,868 Mil.
Long-Term Debt was $1,123 Mil.
Net Income was 326.24 + 291.447 + 115.457 + 116.123 = $849 Mil.
Non Operating Income was 14.593 + 5.147 + -0.503 + 0.552 = $20 Mil.
Cash Flow from Operations was 549.73 + 414.699 + -83.119 + 305.855 = $1,187 Mil.
Accounts Receivable was $1,349 Mil.
Revenue was 2847.417 + 2713.889 + 2167.168 + 2221.87 = $9,950 Mil.
Gross Profit was 1295.958 + 1233.579 + 962.851 + 995.508 = $4,488 Mil.
Total Current Assets was $3,771 Mil.
Total Assets was $6,922 Mil.
Property, Plant and Equipment(Net PPE) was $1,011 Mil.
Depreciation, Depletion and Amortization(DDA) was $185 Mil.
Selling, General & Admin. Expense(SGA) was $3,388 Mil.
Total Current Liabilities was $2,406 Mil.
Long-Term Debt was $1,632 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)
=(1408.967 / 11017.179) / (1348.607 / 9950.344)
=0.12788818 / 0.13553371
=0.9436

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)
=(1409.653 / 9950.344) / (1470.955 / 11017.179)
=0.45102923 / 0.46025276
=0.98

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 - (3079.735 + 1013.285) / 6317.005) / (1 - (3770.715 + 1010.928) / 6921.588)
=0.3520632 / 0.30916966
=1.1387

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
=11017.179 / 9950.344
=1.1072

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))
=(184.933 / (184.933 + 1010.928)) / (197 / (197 + 1013.285))
=0.15464423 / 0.16277158
=0.9501

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)
=(3799.825 / 11017.179) / (3388.223 / 9950.344)
=0.3449 / 0.34051315
=1.0129

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)
=((1122.699 + 2868.382) / 6317.005) / ((1631.988 + 2406.273) / 6921.588)
=0.63179956 / 0.58342984
=1.0829

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
=(849.267 - 19.789 - 1187.165) / 6317.005
=-0.0566

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.

Sherwin-Williams Co has a M-score of -2.69 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.

Sherwin-Williams Co Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.17770.94990.98410.9820.88721.01681.20140.9580.9590.9952
GMI 1.02761.03140.97980.97251.02530.95321.02751.04790.96830.9733
AQI 1.1590.95490.86781.13090.95971.07630.96580.99230.8841.015
SGI 1.13061.17611.08611.0250.99680.8891.09621.12721.08771.0683
DEPI 0.94960.94351.13320.97330.95310.93441.11070.97771.01631.0076
SGAI 0.97260.9560.99461.01511.02171.07070.98190.96281.01220.9958
LVGI 1.04420.99431.01411.05841.01180.9921.04241.02121.05031.0165
TATA -0.0312-0.0459-0.0432-0.0538-0.0893-0.0932-0.0458-0.0571-0.0428-0.0517
M-score -2.28-2.58-2.67-2.71-3.02-3.01-2.42-2.65-2.72-2.68

Sherwin-Williams Co Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.93430.98540.9590.94221.00221.00680.99520.95620.97780.9436
GMI 1.02160.98750.96830.95750.96140.96810.97330.97980.9790.98
AQI 1.01440.99080.8840.92660.89920.83931.0151.03981.06451.1387
SGI 1.11921.09221.08771.05741.04761.06051.06831.08571.10381.1072
DEPI 0.99341.05371.01631.00541.00431.02751.00761.00210.9980.9501
SGAI 0.95840.97421.01191.02331.02081.0230.99581.00471.01731.0129
LVGI 1.04530.95361.05030.99630.99771.12111.01651.0431.08031.0829
TATA -0.0564-0.0536-0.0428-0.0506-0.0497-0.0567-0.0517-0.0543-0.0519-0.0566
M-score -2.69-2.65-2.72-2.77-2.73-2.81-2.68-2.71-2.67-2.69
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