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Sherwin-Williams Co (NYSE:SHW)
Beneish M-Score
-2.76 (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 -2.76 suggests that the company is not a manipulator.

SHW' s 10-Year Beneish M-Score Range
Min: -3.23   Max: -2.15
Current: -2.76

-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 * 0.9738+0.528 * 0.9742+0.404 * 0.998+0.892 * 1.0798+0.115 * 0.9565
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0026+4.679 * -0.0419-0.327 * 1.3301
=-2.76

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $1,235 Mil.
Revenue was 2450.284 + 2569.412 + 3150.57 + 3042.995 = $11,213 Mil.
Gross Profit was 1132.449 + 1217.975 + 1470.955 + 1409.653 = $5,231 Mil.
Total Current Assets was $2,766 Mil.
Total Assets was $5,859 Mil.
Property, Plant and Equipment(Net PPE) was $998 Mil.
Depreciation, Depletion and Amortization(DDA) was $199 Mil.
Selling, General & Admin. Expense(SGA) was $3,868 Mil.
Total Current Liabilities was $3,379 Mil.
Long-Term Debt was $1,123 Mil.
Net Income was 131.404 + 132.743 + 326.24 + 291.447 = $882 Mil.
Non Operating Income was 1.918 + -3.837 + 14.593 + 5.147 = $18 Mil.
Cash Flow from Operations was -55.068 + 200.218 + 549.73 + 414.699 = $1,110 Mil.
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 $3,573 Mil.
Total Current Liabilities was $2,453 Mil.
Long-Term Debt was $1,122 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)
=(1234.612 / 11213.261) / (1174.116 / 10384.92)
=0.11010285 / 0.11305971
=0.9738

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)
=(1217.975 / 10384.92) / (1132.449 / 11213.261)
=0.45446821 / 0.46650408
=0.9742

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 - (2765.79 + 998.432) / 5859.25) / (1 - (2967.478 + 1004.394) / 6189.225)
=0.35755907 / 0.3582602
=0.998

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
=11213.261 / 10384.92
=1.0798

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))
=(190.198 / (190.198 + 1004.394)) / (199.39 / (199.39 + 998.432))
=0.15921587 / 0.16646046
=0.9565

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)
=(3868.075 / 11213.261) / (3573.09 / 10384.92)
=0.34495541 / 0.34406524
=1.0026

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)
=((1122.741 + 3379.045) / 5859.25) / ((1122.396 + 2452.644) / 6189.225)
=0.7683212 / 0.57762321
=1.3301

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
=(881.834 - 17.821 - 1109.579) / 5859.25
=-0.0419

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 -2.76 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.94990.98410.9820.88721.01681.20140.9580.9590.99520.9425
GMI 1.03140.97980.97251.02530.95321.02751.04790.96830.97330.9768
AQI 0.95490.86781.13090.95971.07630.96580.99230.8841.0151.0758
SGI 1.17611.08611.0250.99680.8891.09621.12721.08771.06831.0927
DEPI 0.94351.13320.97330.95310.93441.11070.97771.01631.00760.9524
SGAI 0.9560.99461.01511.02171.07070.98190.96281.01220.99581.0089
LVGI 0.99431.01411.05841.01180.9921.04241.02121.05031.01651.1653
TATA -0.0459-0.0432-0.0538-0.0893-0.0932-0.0458-0.0571-0.0428-0.0517-0.0405
M-score -2.58-2.67-2.71-3.02-3.01-2.42-2.65-2.72-2.68-2.68

Sherwin-Williams Co Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 0.9590.94221.00221.00680.99520.95620.97780.94360.94250.9738
GMI 0.96830.95750.96140.96810.97330.97980.9790.980.97680.9742
AQI 0.8840.92660.89920.83931.0151.03981.06451.13871.07580.998
SGI 1.08771.05741.04761.06051.06831.08571.10381.10721.09271.0798
DEPI 1.01631.00541.00431.02751.00761.00210.9980.95010.95240.9565
SGAI 1.01191.02331.02081.0230.99581.00471.01731.01291.00891.0026
LVGI 1.05030.99630.99771.12111.01651.0431.08031.08291.16531.3301
TATA -0.0428-0.0506-0.0497-0.0567-0.0517-0.0543-0.052-0.0567-0.0406-0.0419
M-score -2.72-2.77-2.73-2.81-2.68-2.71-2.67-2.69-2.68-2.76
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