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The Scotts Miracle Gro Co (NYSE:SMG)
Beneish M-Score
-2.28 (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.

The Scotts Miracle Gro Co has a M-score of -2.28 suggests that the company is not a manipulator.

SMG' s Beneish M-Score Range Over the Past 10 Years
Min: -3.27   Max: -1.92
Current: -2.28

-3.27
-1.92

During the past 13 years, the highest Beneish M-Score of The Scotts Miracle Gro Co was -1.92. 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 The 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 * 1.0482+0.528 * 1.0115+0.404 * 1.3316+0.892 * 1.0621+0.115 * 0.9484
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9979+4.679 * -0.0049-0.327 * 1.0409
=-2.28

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $206 Mil.
Revenue was 245.7 + 483.2 + 1214.8 + 1102.3 = $3,046 Mil.
Gross Profit was 42.6 + 153.1 + 449.2 + 433.3 = $1,078 Mil.
Total Current Assets was $1,148 Mil.
Total Assets was $2,727 Mil.
Property, Plant and Equipment(Net PPE) was $449 Mil.
Depreciation, Depletion and Amortization(DDA) was $71 Mil.
Selling, General & Admin. Expense(SGA) was $724 Mil.
Total Current Liabilities was $446 Mil.
Long-Term Debt was $1,504 Mil.
Net Income was -81.3 + -23.6 + 133.4 + 124.6 = $153 Mil.
Non Operating Income was -8.8 + 0 + 0 + 0 = $-9 Mil.
Cash Flow from Operations was -338.6 + 222.7 + 672.9 + -381.7 = $175 Mil.
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.



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)
=(206.4 / 3046) / (185.4 / 2867.9)
=0.067761 / 0.06464661
=1.0482

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)
=(153.1 / 2867.9) / (42.6 / 3046)
=0.35803201 / 0.35397242
=1.0115

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 - (1148 + 449.2) / 2727.4) / (1 - (1125.9 + 434.4) / 2265.2)
=0.41438733 / 0.31118665
=1.3316

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
=3046 / 2867.9
=1.0621

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))
=(64.5 / (64.5 + 434.4)) / (70.9 / (70.9 + 449.2))
=0.12928443 / 0.13631994
=0.9484

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)
=(724.1 / 3046) / (683.2 / 2867.9)
=0.2377216 / 0.23822309
=0.9979

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)
=((1503.6 + 445.6) / 2727.4) / ((1133.3 + 421.9) / 2265.2)
=0.71467332 / 0.68656189
=1.0409

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
=(153.1 - -8.8 - 175.3) / 2727.4
=-0.0049

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.

The Scotts Miracle Gro Co has a M-score of -2.28 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.

The Scotts Miracle Gro Co Annual Data

Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15
DSRI 1.03360.98210.98390.93731.01820.87711.02630.98921.06480.9554
GMI 1.02461.01331.110.9090.94871.0331.03980.97520.96091.0283
AQI 0.92460.97810.88850.96140.98820.95850.96251.04911.0191.335
SGI 1.13841.06481.03831.05360.99950.90310.99660.99661.00881.0617
DEPI 1.07840.98990.91811.2081.07380.96741.06110.94131.05370.973
SGAI 0.88281.03350.98611.07930.92251.031.02290.92971.02040.9667
LVGI 1.01811.6220.99710.89430.84661.14520.95340.87091.17861.0808
TATA -0.0224-0.0504-0.0982-0.0501-0.04240.0229-0.0226-0.0934-0.0309-0.0345
M-score -2.42-2.89-2.91-2.74-2.62-2.63-2.54-2.88-2.63-2.50

The Scotts Miracle Gro Co Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.99951.41791.50881.06231.08340.96551.0290.95761.04820.9953
GMI 0.97640.91260.96610.96220.98131.02191.02371.02681.01150.9711
AQI 1.06011.01310.95421.0190.96521.04891.43931.3351.33161.198
SGI 0.99521.07561.03061.01121.02171.00721.05321.05911.06211.1037
DEPI 0.93811.04641.06511.05371.02811.00170.98380.9730.94841.1439
SGAI 0.93030.89130.92441.0391.01061.04981.03290.94920.99790.9427
LVGI 0.94410.99481.03891.17861.13941.03591.12451.08081.04091.0228
TATA -0.0774-0.0238-0.024-0.03090.0063-0.0167-0.0207-0.0345-0.0049-0.084
M-score -2.81-2.15-2.13-2.63-2.42-2.57-2.36-2.50-2.28-2.70
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