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Scotts Miracle Gro Co (NYSE:SMG)
Beneish M-Score
-2.80 (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.

Scotts Miracle Gro Co has a M-score of -2.80 suggests that the company is not a manipulator.

SMG' s 10-Year Beneish M-Score Range
Min: -3.27   Max: -1.93
Current: -2.8

-3.27
-1.93

During the past 13 years, the highest Beneish M-Score of Scotts Miracle Gro Co was -1.93. The lowest was -3.27. And the median was -2.60.


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 Scotts Miracle Gro 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 * 1.0036+0.528 * 0.9716+0.404 * 1.0601+0.892 * 0.9911+0.115 * 1.0466
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9335+4.679 * -0.0774-0.327 * 0.9441
=-2.80

* 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 $168 Mil.
Revenue was 196.4 + 443 + 1148.1 + 1019.6 = $2,807 Mil.
Gross Profit was 34.9 + 130.8 + 441.8 + 378.7 = $986 Mil.
Total Current Assets was $1,016 Mil.
Total Assets was $2,159 Mil.
Property, Plant and Equipment(Net PPE) was $448 Mil.
Depreciation, Depletion and Amortization(DDA) was $66 Mil.
Selling, General & Admin. Expense(SGA) was $662 Mil.
Total Current Liabilities was $649 Mil.
Long-Term Debt was $652 Mil.
Net Income was -65.6 + -19.4 + 148.2 + 100 = $163 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was -180.2 + 198.9 + 688.4 + -376.7 = $330 Mil.
Accounts Receivable was $168 Mil.
Revenue was 205.8 + 401.2 + 1054.9 + 1170.4 = $2,832 Mil.
Gross Profit was 31.1 + 105 + 369 + 461.7 = $967 Mil.
Total Current Assets was $1,057 Mil.
Total Assets was $2,128 Mil.
Property, Plant and Equipment(Net PPE) was $424 Mil.
Depreciation, Depletion and Amortization(DDA) was $66 Mil.
Selling, General & Admin. Expense(SGA) was $715 Mil.
Total Current Liabilities was $376 Mil.
Long-Term Debt was $982 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)
=(167.5 / 2807.1) / (168.4 / 2832.3)
=0.05967012 / 0.05945698
=1.0036

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)
=(130.8 / 2832.3) / (34.9 / 2807.1)
=0.34134802 / 0.35132343
=0.9716

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 - (1015.7 + 447.5) / 2159.4) / (1 - (1056.9 + 424) / 2128.1)
=0.32240437 / 0.30412105
=1.0601

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
=2807.1 / 2832.3
=0.9911

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))
=(65.8 / (65.8 + 424)) / (65.9 / (65.9 + 447.5))
=0.13434055 / 0.12835995
=1.0466

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)
=(661.7 / 2807.1) / (715.2 / 2832.3)
=0.2357237 / 0.25251562
=0.9335

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)
=((652.3 + 648.9) / 2159.4) / ((981.9 + 376.4) / 2128.1)
=0.60257479 / 0.63826888
=0.9441

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
=(163.2 - 0 - 330.4) / 2159.4
=-0.0774

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.

Scotts Miracle Gro Co has a M-score of -2.80 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.

Scotts Miracle Gro Co Annual Data

Sep04Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13
DSRI 0.92770.9831.03360.98210.98390.98780.89941.00411.0020.9507
GMI 0.96071.03591.02461.01331.110.88810.95571.02991.05970.9752
AQI 1.00271.01960.92460.97810.88850.96140.89771.05510.96251.0491
SGI 1.08491.12481.13841.06481.03830.99960.97230.96611.00940.9966
DEPI 0.89380.89981.07840.98990.91811.2081.04190.9971.06110.9413
SGAI 1.05391.04220.88281.03351.00351.04060.94911.03021.01310.9297
LVGI 0.89810.84541.01811.6220.99710.89430.8561.13260.95340.8709
TATA -0.0559-0.04970.0034-0.04-0.0982-0.0501-0.04240.0229-0.0226-0.0934
M-score -2.74-2.56-2.30-2.84-2.92-2.75-2.80-2.41-2.54-2.91

Scotts Miracle Gro Co Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.00410.88071.04320.89561.0020.91060.89381.1240.95071.0036
GMI 1.02991.04741.08161.07541.05971.04281.06330.98570.97520.9716
AQI 1.05511.03050.95550.99160.96250.99621.03880.99951.04911.0601
SGI 0.96610.96290.9510.98781.00941.02280.95430.98880.99660.9911
DEPI 0.9970.98761.02540.9611.06110.9881.02521.02090.94131.0466
SGAI 1.03020.97961.02590.99891.01311.03381.02210.96470.92970.9335
LVGI 1.13261.13481.09841.03060.95340.93640.96450.94420.87090.9441
TATA 0.02290.03350.0023-0.0661-0.0226-0.0344-0.0494-0.0174-0.0934-0.0774
M-score -2.41-2.47-2.48-2.87-2.54-2.67-2.79-2.44-2.91-2.80
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