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Sherwin-Williams Company (NYSE:SHW)
Beneish M-Score
-2.68 (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 Company has a M-score of -2.68 suggests that the company is not a manipulator.

SHW' s 10-Year Beneish M-Score Range
Min: -3.12   Max: -2.15
Current: -2.68

-3.12
-2.15

During the past 13 years, the highest Beneish M-Score of Sherwin-Williams Company was -2.15. The lowest was -3.12. 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 Company 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 * 0.9952+0.528 * 0.9733+0.404 * 1.015+0.892 * 1.0683+0.115 * 1.0076
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9958+4.679 * -0.0517-0.327 * 1.0165
=-2.68

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $1,098 Mil.
Revenue was 2457.058 + 2847.417 + 2713.889 + 2167.168 = $10,186 Mil.
Gross Profit was 1124.178 + 1295.958 + 1233.579 + 962.851 = $4,617 Mil.
Total Current Assets was $3,159 Mil.
Total Assets was $6,383 Mil.
Property, Plant and Equipment(Net PPE) was $1,021 Mil.
Depreciation, Depletion and Amortization(DDA) was $188 Mil.
Selling, General & Admin. Expense(SGA) was $3,468 Mil.
Total Current Liabilities was $2,529 Mil.
Long-Term Debt was $1,122 Mil.
Net Income was 116.123 + 262.966 + 257.287 + 116.185 = $753 Mil.
Non Operating Income was 0.552 + -3.494 + -0.715 + 2.721 = $-1 Mil.
Cash Flow from Operations was 305.855 + 475.836 + 393.206 + -91.131 = $1,084 Mil.
Accounts Receivable was $1,033 Mil.
Revenue was 2221.87 + 2603.226 + 2573.022 + 2136.344 = $9,534 Mil.
Gross Profit was 995.508 + 1150.282 + 1150.597 + 909.839 = $4,206 Mil.
Total Current Assets was $3,149 Mil.
Total Assets was $6,235 Mil.
Property, Plant and Equipment(Net PPE) was $966 Mil.
Depreciation, Depletion and Amortization(DDA) was $179 Mil.
Selling, General & Admin. Expense(SGA) was $3,260 Mil.
Total Current Liabilities was $1,876 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)
=(1097.751 / 10185.532) / (1032.508 / 9534.462)
=0.10777552 / 0.10829221
=0.9952

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)
=(1295.958 / 9534.462) / (1124.178 / 10185.532)
=0.44116029 / 0.45324741
=0.9733

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 - (3158.717 + 1021.383) / 6382.507) / (1 - (3149.238 + 965.896) / 6234.737)
=0.34506927 / 0.33996671
=1.015

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
=10185.532 / 9534.462
=1.0683

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))
=(179.202 / (179.202 + 965.896)) / (187.794 / (187.794 + 1021.383))
=0.1564949 / 0.15530729
=1.0076

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)
=(3467.681 / 10185.532) / (3259.648 / 9534.462)
=0.34045163 / 0.34188064
=0.9958

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)
=((1122.373 + 2528.557) / 6382.507) / ((1632.165 + 1876.436) / 6234.737)
=0.57202131 / 0.56275044
=1.0165

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
=(752.561 - -0.936 - 1083.766) / 6382.507
=-0.0517

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 Company has a M-score of -2.68 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 Company 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 Company Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 0.9550.9581.00010.93430.98540.9590.94221.00221.00680.9952
GMI 1.05231.04791.04281.02160.98750.96830.95750.96140.96810.9733
AQI 0.99150.99230.99671.01440.99080.8840.92660.89920.83931.015
SGI 1.14861.12721.12151.11921.09221.08771.05741.04761.06051.0683
DEPI 0.91390.97770.99240.99341.05371.01631.00541.00431.02751.0076
SGAI 0.97310.9630.960.95840.97421.01191.02451.02221.02460.9958
LVGI 0.99881.02121.0161.04530.95361.05030.99630.99771.12111.0165
TATA -0.0304-0.0571-0.0495-0.0564-0.0536-0.0428-0.0506-0.0497-0.0567-0.0517
M-score -2.51-2.65-2.58-2.69-2.65-2.72-2.77-2.73-2.81-2.68
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