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Sherwin-Williams Co (NYSE:SHW)
Beneish M-Score
-2.60 (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 -2.60 suggests that the company is not a manipulator.

SHW' s Beneish M-Score Range Over the Past 10 Years
Min: -3.23   Max: -2.15
Current: -2.6

-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 * 0.9781+0.528 * 0.9538+0.404 * 1.0067+0.892 * 1.026+0.115 * 0.9994
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0022+4.679 * -0.0161-0.327 * 1.0931
=-2.60

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $1,414 Mil.
Revenue was 3152.285 + 3132.139 + 2450.284 + 2569.412 = $11,304 Mil.
Gross Profit was 1574.552 + 1529.986 + 1132.449 + 1217.975 = $5,455 Mil.
Total Current Assets was $2,924 Mil.
Total Assets was $6,102 Mil.
Property, Plant and Equipment(Net PPE) was $1,015 Mil.
Depreciation, Depletion and Amortization(DDA) was $198 Mil.
Selling, General & Admin. Expense(SGA) was $3,907 Mil.
Total Current Liabilities was $2,294 Mil.
Long-Term Debt was $1,920 Mil.
Net Income was 374.491 + 349.937 + 131.404 + 132.743 = $989 Mil.
Non Operating Income was -4.061 + -9.971 + 1.918 + -3.837 = $-16 Mil.
Cash Flow from Operations was 553.484 + 404.088 + -55.068 + 200.218 = $1,103 Mil.
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.



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)
=(1413.946 / 11304.12) / (1408.967 / 11017.179)
=0.12508236 / 0.12788818
=0.9781

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)
=(1529.986 / 11017.179) / (1574.552 / 11304.12)
=0.46025276 / 0.48256406
=0.9538

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 - (2924.236 + 1015.167) / 6102.023) / (1 - (3079.735 + 1013.285) / 6317.005)
=0.35441033 / 0.3520632
=1.0067

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
=11304.12 / 11017.179
=1.026

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))
=(197 / (197 + 1013.285)) / (197.514 / (197.514 + 1015.167))
=0.16277158 / 0.16287383
=0.9994

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)
=(3907.375 / 11304.12) / (3799.825 / 11017.179)
=0.34565937 / 0.3449
=1.0022

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)
=((1920.15 + 2294.196) / 6102.023) / ((1122.699 + 2868.382) / 6317.005)
=0.69064735 / 0.63179956
=1.0931

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
=(988.575 - -15.951 - 1102.722) / 6102.023
=-0.0161

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 -2.60 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.98410.9820.88721.01681.20140.9580.9590.99520.9425
GMI 0.97980.97251.02530.95321.02751.04790.96830.97330.9768
AQI 0.86781.13090.95971.07630.96580.99230.8841.0151.0758
SGI 1.08611.0250.99680.8891.09621.12721.08771.06831.0927
DEPI 1.13320.97330.95310.93441.11070.97771.01631.00760.9524
SGAI 0.99461.01511.02171.07070.98190.96281.01220.99581.0089
LVGI 1.01411.05841.01180.9921.04241.02121.05031.01651.1653
TATA -0.0432-0.0538-0.0893-0.0932-0.0458-0.0571-0.0428-0.0517-0.0405
M-score -2.67-2.71-3.02-3.01-2.42-2.65-2.72-2.68-2.68

Sherwin-Williams Co Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1.00680.99520.95620.97780.94360.94250.97380.98260.9781
GMI 0.96810.97330.97980.9790.980.97680.97420.96510.9538
AQI 0.83931.0151.03981.06451.13871.07580.9980.98611.0067
SGI 1.06051.06831.08571.10381.10721.09271.07981.05491.026
DEPI 1.02751.00761.00210.9980.95010.95240.95650.97990.9994
SGAI 1.0230.99581.00471.01731.01291.00891.00260.99731.0022
LVGI 1.12111.01651.0431.08031.08291.16531.33011.20351.0931
TATA -0.0567-0.0517-0.0543-0.051-0.0558-0.0396-0.0409-0.0263-0.0161
M-score -2.81-2.68-2.71-2.66-2.69-2.68-2.75-2.66-2.60
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