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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 -2.62 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Scotts Miracle Gro Co was -2.25. The lowest was -2.92. And the median was -2.65.
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 * 1.0502||+||0.528 * 0.9697||+||0.404 * 1.019||+||0.892 * 1.0229||+||0.115 * 1.0537|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0101||+||4.679 * -0.0309||-||0.327 * 1.1786|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $350 Mil.|
Revenue was 454.3 + 1116.4 + 1081 + 196.4 = $2,848 Mil.
Gross Profit was 140.4 + 423.3 + 433.8 + 34.9 = $1,032 Mil.
Total Current Assets was $935 Mil.
Total Assets was $2,058 Mil.
Property, Plant and Equipment(Net PPE) was $437 Mil.
Depreciation, Depletion and Amortization(DDA) was $64 Mil.
Selling, General & Admin. Expense(SGA) was $695 Mil.
Total Current Liabilities was $545 Mil.
Long-Term Debt was $692 Mil.
Net Income was -15.2 + 121.7 + 125.7 + -65.6 = $167 Mil.
Non Operating Income was 0 + 0 + -10.7 + 0 = $-11 Mil.
Cash Flow from Operations was 206.6 + 648.9 + -434.4 + -180.2 = $241 Mil.
|Accounts Receivable was $326 Mil.
Revenue was 433.6 + 1137.1 + 1007.9 + 205.8 = $2,784 Mil.
Gross Profit was 130.1 + 440.3 + 377.2 + 31.1 = $979 Mil.
Total Current Assets was $881 Mil.
Total Assets was $1,937 Mil.
Property, Plant and Equipment(Net PPE) was $422 Mil.
Depreciation, Depletion and Amortization(DDA) was $66 Mil.
Selling, General & Admin. Expense(SGA) was $672 Mil.
Total Current Liabilities was $510 Mil.
Long-Term Debt was $478 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(350.4 / 2848.1)||/||(326.2 / 2784.4)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(423.3 / 2784.4)||/||(140.4 / 2848.1)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (935 + 437) / 2058.3)||/||(1 - (881 + 422.3) / 1937.2)|
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.
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))|
|=||(66.1 / (66.1 + 422.3))||/||(64.4 / (64.4 + 437))|
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)|
|=||(694.6 / 2848.1)||/||(672.3 / 2784.4)|
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)|
|=||((692.4 + 544.7) / 2058.3)||/||((478.1 + 509.8) / 1937.2)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(166.6 - -10.7||-||240.9)||/||2058.3|
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 -2.62 suggests that the company will not be a manipulator.
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
Scotts Miracle Gro Co Annual Data
Scotts Miracle Gro Co Quarterly Data