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Sherwin-Williams Co (NYSE:SHW)
Beneish M-Score
-2.67 (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 -2.67 suggests that the company is not a manipulator.

SHW' s Beneish M-Score Range Over the Past 10 Years
Min: -3.23   Max: -1.06
Current: -2.67

-3.23
-1.06

During the past 13 years, the highest Beneish M-Score of Sherwin-Williams Co was -1.06. The lowest was -3.23. And the median was -2.65.


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 * 1.0227+0.528 * 0.9401+0.404 * 0.9706+0.892 * 1.0223+0.115 * 1.0559
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0082+4.679 * -0.0478-0.327 * 0.8994
=-2.67

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $1,291 Mil.
Revenue was 2574.024 + 2604.596 + 3152.285 + 3132.139 = $11,463 Mil.
Gross Profit was 1261.745 + 1322.239 + 1574.552 + 1529.986 = $5,689 Mil.
Total Current Assets was $2,889 Mil.
Total Assets was $6,038 Mil.
Property, Plant and Equipment(Net PPE) was $1,057 Mil.
Depreciation, Depletion and Amortization(DDA) was $198 Mil.
Selling, General & Admin. Expense(SGA) was $3,987 Mil.
Total Current Liabilities was $2,263 Mil.
Long-Term Debt was $1,909 Mil.
Net Income was 147.128 + 198.017 + 374.491 + 349.937 = $1,070 Mil.
Non Operating Income was -17.78 + -31.857 + -4.061 + -10.648 = $-64 Mil.
Cash Flow from Operations was -79.807 + 544.959 + 553.484 + 404.088 = $1,423 Mil.
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 $2,765 Mil.
Total Assets was $5,853 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 $1,116 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)
=(1290.749 / 11463.044) / (1234.612 / 11213.261)
=0.11260089 / 0.11010285
=1.0227

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)
=(1322.239 / 11213.261) / (1261.745 / 11463.044)
=0.46650408 / 0.49624881
=0.9401

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 - (2888.625 + 1057.025) / 6038.309) / (1 - (2764.576 + 998.432) / 5852.846)
=0.34656375 / 0.35706356
=0.9706

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
=11463.044 / 11213.261
=1.0223

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))
=(199.39 / (199.39 + 998.432)) / (197.834 / (197.834 + 1057.025))
=0.16646046 / 0.15765437
=1.0559

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)
=(3986.676 / 11463.044) / (3868.075 / 11213.261)
=0.34778511 / 0.34495541
=1.0082

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)
=((1908.774 + 2262.561) / 6038.309) / ((1116.337 + 3379.045) / 5852.846)
=0.69081178 / 0.76806771
=0.8994

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
=(1069.573 - -64.346 - 1422.724) / 6038.309
=-0.0478

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 -2.67 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 0.98410.9820.88721.01681.20140.9580.9590.99520.94250.9674
GMI 0.97980.97271.02520.95321.02751.04790.96830.97330.97680.9465
AQI 0.86781.13090.95971.07630.96580.99230.8841.0151.07580.9726
SGI 1.08611.0250.99680.8891.09621.12721.08771.06831.09271.0188
DEPI 1.13320.97330.95310.93441.11070.97771.01631.00760.95241.0187
SGAI 0.99461.00841.0211.09280.9690.96371.01120.99581.00891.0047
LVGI 1.01411.05841.01180.9921.04241.02121.05031.01651.16531.0522
TATA -0.0432-0.0471-0.0893-0.0932-0.0474-0.0571-0.0413-0.0517-0.0405-0.0617
M-score -2.67-2.68-3.02-3.01-2.43-2.65-2.71-2.68-2.68-2.84

Sherwin-Williams Co Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.99520.95620.97780.94360.94250.97380.98260.97810.96741.0227
GMI 0.97330.97980.9790.980.97680.97420.96510.95380.94650.9401
AQI 1.0151.03981.06451.13871.07580.99670.98611.00670.97260.9706
SGI 1.06831.08571.10381.10721.09271.07981.05491.0261.01881.0223
DEPI 1.00761.00210.9980.95010.95240.95650.97990.99941.01871.0559
SGAI 0.99581.00471.01731.01291.00891.00260.99731.00221.00471.0082
LVGI 1.01651.0431.08031.08291.16531.32971.20351.09311.05220.8994
TATA 0.28890.2970.29110.2876-0.0339-0.0354-0.0201-0.0098-0.0603-0.0478
M-score -1.08-1.06-1.06-1.08-2.65-2.73-2.63-2.58-2.83-2.67
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