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Sherwin-Williams Co (NYSE:SHW)
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.

Sherwin-Williams Co has a M-score of -2.66 suggests that the company is not a manipulator.

SHW' s 10-Year Beneish M-Score Range
Min: -3.23   Max: -2.15
Current: -2.66

-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 -2.66.


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 * 0.9778+0.528 * 0.979+0.404 * 1.0645+0.892 * 1.1038+0.115 * 0.998
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0161+4.679 * -0.0519-0.327 * 1.0803
=-2.66

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $1,403 Mil.
Revenue was 3042.995 + 2366.556 + 2457.058 + 2847.417 = $10,714 Mil.
Gross Profit was 1409.653 + 1065.901 + 1124.178 + 1295.958 = $4,896 Mil.
Total Current Assets was $3,108 Mil.
Total Assets was $6,341 Mil.
Property, Plant and Equipment(Net PPE) was $1,006 Mil.
Depreciation, Depletion and Amortization(DDA) was $194 Mil.
Selling, General & Admin. Expense(SGA) was $3,701 Mil.
Total Current Liabilities was $2,725 Mil.
Long-Term Debt was $1,122 Mil.
Net Income was 291.447 + 115.457 + 116.123 + 262.966 = $786 Mil.
Non Operating Income was 5.147 + -0.503 + 0.552 + -3.494 = $2 Mil.
Cash Flow from Operations was 414.699 + -83.119 + 305.855 + 475.836 = $1,113 Mil.
Accounts Receivable was $1,300 Mil.
Revenue was 2713.889 + 2167.168 + 2221.87 + 2603.226 = $9,706 Mil.
Gross Profit was 1233.579 + 962.851 + 995.508 + 1150.282 = $4,342 Mil.
Total Current Assets was $3,342 Mil.
Total Assets was $6,409 Mil.
Property, Plant and Equipment(Net PPE) was $952 Mil.
Depreciation, Depletion and Amortization(DDA) was $183 Mil.
Selling, General & Admin. Expense(SGA) was $3,299 Mil.
Total Current Liabilities was $1,968 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)
=(1402.803 / 10714.026) / (1299.679 / 9706.153)
=0.13093145 / 0.13390259
=0.9778

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)
=(1065.901 / 9706.153) / (1409.653 / 10714.026)
=0.44736777 / 0.45694214
=0.979

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 - (3108.118 + 1006.296) / 6341) / (1 - (3342.435 + 952.191) / 6408.504)
=0.35114114 / 0.32985514
=1.0645

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
=10714.026 / 9706.153
=1.1038

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))
=(183.16 / (183.16 + 952.191)) / (194.025 / (194.025 + 1006.296))
=0.16132456 / 0.16164426
=0.998

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)
=(3700.717 / 10714.026) / (3299.442 / 9706.153)
=0.34540863 / 0.33993303
=1.0161

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)
=((1122.42 + 2725.284) / 6341) / ((1631.951 + 1967.505) / 6408.504)
=0.60679767 / 0.56166868
=1.0803

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
=(785.993 - 1.702 - 1113.271) / 6341
=-0.0519

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 -2.66 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.

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

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1.00010.93430.98540.9590.94221.00221.00680.99520.95620.9778
GMI 1.04281.02160.98750.96830.95750.96140.96810.97330.97980.979
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 0.960.95840.97421.01191.02331.02081.02320.99451.00351.0161
LVGI 1.0161.04530.95361.05030.99630.99771.12111.01651.0431.0803
TATA -0.0495-0.0564-0.0536-0.0428-0.0506-0.0497-0.0567-0.0517-0.0543-0.0519
M-score -2.58-2.69-2.65-2.72-2.77-2.73-2.81-2.68-2.71-2.66
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