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Sherwin-Williams Co (NYSE:SHW)
Beneish M-Score
-2.71 (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 -2.71 suggests that the company is not a manipulator.

SHW' s 10-Year Beneish M-Score Range
Min: -3.23   Max: -2.15
Current: -2.71

-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 * 0.9562+0.528 * 0.9835+0.404 * 1.0398+0.892 * 1.0857+0.115 * 1.0021
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0223+4.679 * -0.0543-0.327 * 1.043
=-2.71

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $1,174 Mil.
Revenue was 2366.556 + 2457.058 + 2847.417 + 2713.889 = $10,385 Mil.
Gross Profit was 1065.901 + 1124.178 + 1295.958 + 1233.579 = $4,720 Mil.
Total Current Assets was $2,967 Mil.
Total Assets was $6,189 Mil.
Property, Plant and Equipment(Net PPE) was $1,004 Mil.
Depreciation, Depletion and Amortization(DDA) was $190 Mil.
Selling, General & Admin. Expense(SGA) was $3,574 Mil.
Total Current Liabilities was $2,453 Mil.
Long-Term Debt was $1,122 Mil.
Net Income was 115.457 + 116.123 + 262.966 + 257.287 = $752 Mil.
Non Operating Income was -0.503 + 0.552 + -3.494 + -0.715 = $-4 Mil.
Cash Flow from Operations was -83.119 + 305.855 + 475.836 + 393.206 = $1,092 Mil.
Accounts Receivable was $1,131 Mil.
Revenue was 2167.168 + 2221.87 + 2603.226 + 2573.022 = $9,565 Mil.
Gross Profit was 962.851 + 1011.508 + 1150.282 + 1150.597 = $4,275 Mil.
Total Current Assets was $3,087 Mil.
Total Assets was $6,166 Mil.
Property, Plant and Equipment(Net PPE) was $955 Mil.
Depreciation, Depletion and Amortization(DDA) was $181 Mil.
Selling, General & Admin. Expense(SGA) was $3,221 Mil.
Total Current Liabilities was $1,783 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)
=(1174.116 / 10384.92) / (1130.94 / 9565.286)
=0.11305971 / 0.11823379
=0.9562

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)
=(1124.178 / 9565.286) / (1065.901 / 10384.92)
=0.44695349 / 0.45446821
=0.9835

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 - (2967.478 + 1004.394) / 6189.225) / (1 - (3086.752 + 954.917) / 6166.22)
=0.3582602 / 0.34454674
=1.0398

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
=10384.92 / 9565.286
=1.0857

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))
=(181.275 / (181.275 + 954.917)) / (190.198 / (190.198 + 1004.394))
=0.1595461 / 0.15921587
=1.0021

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)
=(3574.409 / 10384.92) / (3220.595 / 9565.286)
=0.34419225 / 0.33669615
=1.0223

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)
=((1122.396 + 2452.644) / 6189.225) / ((1632.198 + 1782.606) / 6166.22)
=0.57762321 / 0.55379211
=1.043

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
=(751.833 - -4.16 - 1091.778) / 6189.225
=-0.0543

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 -2.71 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 1.02761.03140.97980.97251.02530.95321.02751.04790.96460.977
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 0.97260.9560.99461.01511.01431.09280.9690.96280.99231.0158
LVGI 1.04420.99431.01411.05841.01180.9921.04241.02121.05031.0165
TATA -0.0312-0.0459-0.0432-0.0538-0.0734-0.0932-0.0474-0.0556-0.0349-0.0517
M-score -2.28-2.58-2.67-2.71-2.94-3.01-2.43-2.65-2.68-2.68

Sherwin-Williams Co Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1.00010.93430.98540.9590.94221.00221.00680.99520.95620.9778
GMI 1.04281.02160.98750.96460.95390.95790.96460.9770.98350.9827
AQI 0.99671.01440.99080.8840.92660.89920.83931.0151.03981.0645
SGI 1.12151.11921.09221.08771.05741.04761.06051.06831.08571.1038
DEPI 0.99240.99341.05371.01631.00541.00431.02751.00761.00210.998
SGAI 0.95970.95890.9760.99191.00611.00591.00861.01731.02231.0337
LVGI 1.0161.04530.95361.05030.99630.99771.12111.01651.0431.0803
TATA -0.0485-0.0548-0.0518-0.0343-0.042-0.0418-0.0496-0.0517-0.0543-0.0519
M-score -2.58-2.68-2.64-2.68-2.73-2.69-2.77-2.68-2.71-2.67
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