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Scotts Miracle Gro Co (NYSE:SMG)
Beneish M-Score
-2.36 (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 -2.36 suggests that the company is not a manipulator.

SMG' s 10-Year Beneish M-Score Range
Min: -3.27   Max: -1.93
Current: -2.36

-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 * 1.029+0.528 * 1.0237+0.404 * 1.4393+0.892 * 1.0532+0.115 * 0.9838
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0329+4.679 * -0.0207-0.327 * 1.1245
=-2.36

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $813 Mil.
Revenue was 1214.8 + 1102.3 + 216.2 + 454.3 = $2,988 Mil.
Gross Profit was 449.2 + 433.3 + 29.3 + 140.4 = $1,052 Mil.
Total Current Assets was $1,440 Mil.
Total Assets was $3,018 Mil.
Property, Plant and Equipment(Net PPE) was $448 Mil.
Depreciation, Depletion and Amortization(DDA) was $67 Mil.
Selling, General & Admin. Expense(SGA) was $694 Mil.
Total Current Liabilities was $1,343 Mil.
Long-Term Debt was $738 Mil.
Net Income was 133.4 + 124.6 + -74.6 + -15.2 = $168 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 672.9 + -381.7 + -267 + 206.6 = $231 Mil.
Accounts Receivable was $750 Mil.
Revenue was 1116.4 + 1081 + 196.4 + 443 = $2,837 Mil.
Gross Profit was 423.3 + 433.8 + 34.9 + 130.8 = $1,023 Mil.
Total Current Assets was $1,411 Mil.
Total Assets was $2,506 Mil.
Property, Plant and Equipment(Net PPE) was $443 Mil.
Depreciation, Depletion and Amortization(DDA) was $65 Mil.
Selling, General & Admin. Expense(SGA) was $638 Mil.
Total Current Liabilities was $908 Mil.
Long-Term Debt was $629 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)
=(812.9 / 2987.6) / (750.1 / 2836.8)
=0.27209131 / 0.26441765
=1.029

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)
=(433.3 / 2836.8) / (449.2 / 2987.6)
=0.3605471 / 0.35218905
=1.0237

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 - (1440.2 + 447.9) / 3018.1) / (1 - (1411 + 443.4) / 2506.4)
=0.37440774 / 0.26013406
=1.4393

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
=2987.6 / 2836.8
=1.0532

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 / (65 + 443.4)) / (66.9 / (66.9 + 447.9))
=0.12785208 / 0.12995338
=0.9838

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)
=(693.9 / 2987.6) / (637.9 / 2836.8)
=0.23226001 / 0.22486605
=1.0329

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)
=((738.4 + 1342.9) / 3018.1) / ((628.7 + 908.4) / 2506.4)
=0.68960604 / 0.61327003
=1.1245

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
=(168.2 - 0 - 230.8) / 3018.1
=-0.0207

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 -2.36 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 0.9831.03360.98210.98390.93731.01820.87711.02630.98921.0648
GMI 1.03591.02461.01331.110.9090.94871.0331.03980.97520.9609
AQI 1.01960.92460.97810.88850.96140.98820.95850.96251.04911.019
SGI 1.12481.13841.06481.03831.05360.99950.90310.99660.99661.0088
DEPI 0.89981.07840.98990.91811.2081.07380.96741.06110.94131.0537
SGAI 1.04220.88281.03351.00351.06050.92251.031.02290.92971.0204
LVGI 0.84541.01811.6220.99710.89430.84661.14520.95340.87091.1786
TATA -0.04970.0034-0.04-0.0982-0.0501-0.04240.0229-0.0226-0.0934-0.0309
M-score -2.56-2.30-2.84-2.92-2.74-2.62-2.63-2.54-2.88-2.63

Scotts Miracle Gro Co Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 0.67580.81760.98920.99951.41791.50881.06231.08340.96551.029
GMI 1.03280.94750.97520.97640.91260.96610.96220.98131.02191.0237
AQI 1.03880.99951.04911.06011.01310.95421.0190.96521.04891.4393
SGI 0.93230.96110.99660.99521.07561.03061.01121.02171.00721.0532
DEPI 1.10131.02090.94130.93811.04641.06511.05371.02811.00170.9838
SGAI 1.04120.98790.92970.93030.89130.92441.0391.01061.04981.0329
LVGI 0.96450.94420.87090.94410.99481.03891.17861.13941.03591.1245
TATA -0.0494-0.0174-0.0934-0.0774-0.0238-0.024-0.03090.0063-0.0167-0.0207
M-score -3.02-2.77-2.88-2.81-2.15-2.13-2.63-2.42-2.57-2.36
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