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Scotts Miracle Gro Co (NYSE:SMG)
Beneish M-Score
-2.42 (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 -2.42 suggests that the company is not a manipulator.

SMG' s 10-Year Beneish M-Score Range
Min: -3.27   Max: -1.93
Current: -2.42

-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 -2.59.


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 * 1.0684+0.528 * 0.9903+0.404 * 0.9652+0.892 * 1.036+0.115 * 0.9928
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0011+4.679 * 0.0063-0.327 * 1.1394
=-2.42

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $185 Mil.
Revenue was 216.2 + 454.3 + 1116.4 + 1081 = $2,868 Mil.
Gross Profit was 29.3 + 140.4 + 423.3 + 433.8 = $1,027 Mil.
Total Current Assets was $1,126 Mil.
Total Assets was $2,265 Mil.
Property, Plant and Equipment(Net PPE) was $434 Mil.
Depreciation, Depletion and Amortization(DDA) was $65 Mil.
Selling, General & Admin. Expense(SGA) was $683 Mil.
Total Current Liabilities was $422 Mil.
Long-Term Debt was $1,133 Mil.
Net Income was -74.6 + -15.2 + 121.7 + 125.7 = $158 Mil.
Non Operating Income was 0 + 0 + 0 + -10.7 = $-11 Mil.
Cash Flow from Operations was -267 + 206.6 + 648.9 + -434.4 = $154 Mil.
Accounts Receivable was $168 Mil.
Revenue was 189.6 + 433.6 + 1137.1 + 1007.9 = $2,768 Mil.
Gross Profit was 33.9 + 130.1 + 440.3 + 377.2 = $982 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 $659 Mil.
Total Current Liabilities was $649 Mil.
Long-Term Debt was $652 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)
=(185.4 / 2867.9) / (167.5 / 2768.2)
=0.06464661 / 0.06050863
=1.0684

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)
=(140.4 / 2768.2) / (29.3 / 2867.9)
=0.35456253 / 0.35803201
=0.9903

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 - (1125.9 + 434.4) / 2265.2) / (1 - (1015.7 + 447.5) / 2159.4)
=0.31118665 / 0.32240437
=0.9652

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
=2867.9 / 2768.2
=1.036

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))
=(65.9 / (65.9 + 447.5)) / (64.5 / (64.5 + 434.4))
=0.12835995 / 0.12928443
=0.9928

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)
=(683.2 / 2867.9) / (658.7 / 2768.2)
=0.23822309 / 0.23795246
=1.0011

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)
=((1133.3 + 421.9) / 2265.2) / ((652.3 + 648.9) / 2159.4)
=0.68656189 / 0.60257479
=1.1394

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
=(157.6 - -10.7 - 154.1) / 2265.2
=0.0063

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 -2.42 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

Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14
DSRI 0.9831.03360.98210.98390.98780.89940.95431.05440.96531.0486
GMI 1.03591.02461.01331.110.88810.95571.02991.05970.96450.9715
AQI 1.01960.92460.97810.88850.96140.89771.05510.96251.04911.019
SGI 1.12481.13841.06481.03830.99960.97230.96611.00940.98151.0244
DEPI 0.89981.07840.98990.91811.2081.04190.9971.06110.94131.0537
SGAI 1.04220.88281.03351.00351.04060.94911.03021.01310.94191.0071
LVGI 0.84541.01811.6220.99710.89430.8561.13260.95340.87091.1786
TATA -0.04970.0034-0.04-0.0982-0.0501-0.04240.0229-0.0226-0.0934-0.0309
M-score -2.56-2.30-2.84-2.92-2.75-2.80-2.46-2.49-2.92-2.62

Scotts Miracle Gro Co Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.05440.91060.89771.13330.96161.01771.05841.07261.05271.0684
GMI 1.05971.04281.06040.98070.96770.96270.90450.95720.96830.9903
AQI 0.96250.99621.03880.99951.04911.06011.01310.95421.0190.9652
SGI 1.00941.02280.95010.98070.98520.97741.06421.02491.02041.036
DEPI 1.06110.9881.02521.02090.94131.04661.04641.06511.05370.9928
SGAI 1.01311.03381.00480.93170.95640.94230.93581.00790.99181.0011
LVGI 0.95340.93640.96450.94420.87090.94410.99481.03891.17861.1394
TATA -0.0226-0.0344-0.0494-0.0174-0.0934-0.0774-0.0238-0.024-0.03090.0063
M-score -2.49-2.67-2.79-2.43-2.92-2.81-2.51-2.55-2.62-2.42
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