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Scotts Miracle Gro Co (NYSE:SMG)
Beneish M-Score
-2.50 (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 -2.50 suggests that the company is not a manipulator.

SMG' s Beneish M-Score Range Over the Past 10 Years
Min: -2.92   Max: -2.25
Current: -2.5

-2.92
-2.25

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 -2.62.


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 * 0.9554+0.528 * 1.0283+0.404 * 1.335+0.892 * 1.0617+0.115 * 0.973
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9667+4.679 * -0.0345-0.327 * 1.0808
=-2.50

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $355 Mil.
Revenue was 483.2 + 1214.8 + 1102.3 + 216.2 = $3,017 Mil.
Gross Profit was 153.1 + 449.2 + 433.3 + 29.3 = $1,065 Mil.
Total Current Assets was $949 Mil.
Total Assets was $2,527 Mil.
Property, Plant and Equipment(Net PPE) was $454 Mil.
Depreciation, Depletion and Amortization(DDA) was $69 Mil.
Selling, General & Admin. Expense(SGA) was $698 Mil.
Total Current Liabilities was $613 Mil.
Long-Term Debt was $1,029 Mil.
Net Income was -23.6 + 133.4 + 124.6 + -74.6 = $160 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 222.7 + 672.9 + -381.7 + -267 = $247 Mil.
Accounts Receivable was $350 Mil.
Revenue was 454.3 + 1116.4 + 1081 + 189.6 = $2,841 Mil.
Gross Profit was 140.4 + 423.3 + 433.8 + 33.9 = $1,031 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 $680 Mil.
Total Current Liabilities was $545 Mil.
Long-Term Debt was $692 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)
=(355.4 / 3016.5) / (350.4 / 2841.3)
=0.11781866 / 0.12332383
=0.9554

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)
=(449.2 / 2841.3) / (153.1 / 3016.5)
=0.36300285 / 0.35302503
=1.0283

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 - (948.6 + 453.7) / 2527.2) / (1 - (935 + 437) / 2058.3)
=0.44511713 / 0.3334305
=1.335

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
=3016.5 / 2841.3
=1.0617

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))
=(64.4 / (64.4 + 437)) / (69 / (69 + 453.7))
=0.12844037 / 0.13200689
=0.973

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)
=(698.3 / 3016.5) / (680.4 / 2841.3)
=0.23149345 / 0.23946785
=0.9667

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)
=((1028.5 + 613.1) / 2527.2) / ((692.4 + 544.7) / 2058.3)
=0.64957265 / 0.60102998
=1.0808

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
=(159.8 - 0 - 246.9) / 2527.2
=-0.0345

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 -2.50 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

Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15
DSRI 1.03360.98210.98390.93731.01820.88841.07550.94631.04860.9554
GMI 1.02461.01331.110.9090.94871.01371.0440.9790.97151.0283
AQI 0.92460.97810.88850.96140.98820.95850.96251.04911.0191.335
SGI 1.13841.06481.03831.05360.99950.89170.98961.00121.02441.0617
DEPI 1.07840.98990.91811.2081.07380.96741.06110.94131.05370.973
SGAI 0.88281.03351.00351.06050.92251.041.02990.92651.00710.9667
LVGI 1.01811.6220.99710.89430.84661.14520.95340.87091.17861.0808
TATA 0.0034-0.04-0.0982-0.0501-0.04240.0223-0.0226-0.0934-0.0309-0.0345
M-score -2.30-2.84-2.92-2.74-2.62-2.64-2.50-2.91-2.62-2.50

Scotts Miracle Gro Co Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.96161.01771.05841.07261.05271.06840.95631.02310.95541.0482
GMI 0.96770.96270.90450.95720.96830.99031.02851.02791.02831.0115
AQI 1.04911.06011.01310.95421.0190.96521.04891.43931.3351.3316
SGI 0.98520.97741.06421.02491.02041.0361.01691.05921.06171.0621
DEPI 0.94131.04661.04641.06511.05370.99281.00170.98380.9731.2292
SGAI 0.95640.94230.93581.00790.99181.00111.02190.9880.96670.9979
LVGI 0.87090.94410.99481.03891.17861.13941.03591.12451.08081.0409
TATA -0.0934-0.0774-0.0238-0.024-0.03090.0063-0.0167-0.0207-0.0345-0.1291
M-score -2.92-2.81-2.51-2.55-2.62-2.42-2.56-2.35-2.50-2.83
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