Switch to:
Scotts Miracle Gro Co (NYSE:SMG)
Beneish M-Score
-2.54 (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 -2.54 suggests that the company is not a manipulator.

SMG' s 10-Year Beneish M-Score Range
Min: -3.27   Max: -1.93
Current: -2.54

-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 * 1.0457+0.528 * 0.9791+0.404 * 0.9542+0.892 * 1.0514+0.115 * 1.0264
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0066+4.679 * -0.024-0.327 * 1.0389
=-2.54

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $750 Mil.
Revenue was 1116.4 + 1081 + 196.4 + 476.4 = $2,870 Mil.
Gross Profit was 423.3 + 433.8 + 34.9 + 134.3 = $1,026 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 $679 Mil.
Total Current Liabilities was $908 Mil.
Long-Term Debt was $629 Mil.
Net Income was 121.7 + 125.7 + -65.6 + -19.4 = $162 Mil.
Non Operating Income was 0 + -10.7 + 0 + 0 = $-11 Mil.
Cash Flow from Operations was 648.9 + -434.4 + -180.2 + 198.9 = $233 Mil.
Accounts Receivable was $682 Mil.
Revenue was 1137.1 + 1007.9 + 205.8 + 379.2 = $2,730 Mil.
Gross Profit was 440.3 + 377.2 + 31.1 + 107.2 = $956 Mil.
Total Current Assets was $1,309 Mil.
Total Assets was $2,362 Mil.
Property, Plant and Equipment(Net PPE) was $410 Mil.
Depreciation, Depletion and Amortization(DDA) was $62 Mil.
Selling, General & Admin. Expense(SGA) was $641 Mil.
Total Current Liabilities was $846 Mil.
Long-Term Debt was $548 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)
=(750.1 / 2870.2) / (682.3 / 2730)
=0.26134067 / 0.24992674
=1.0457

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)
=(433.8 / 2730) / (423.3 / 2870.2)
=0.35010989 / 0.3575709
=0.9791

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 - (1411 + 443.4) / 2506.4) / (1 - (1308.5 + 409.8) / 2362.3)
=0.26013406 / 0.27261567
=0.9542

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
=2870.2 / 2730
=1.0514

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))
=(61.9 / (61.9 + 409.8)) / (65 / (65 + 443.4))
=0.13122748 / 0.12785208
=1.0264

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)
=(678.8 / 2870.2) / (641.4 / 2730)
=0.2364992 / 0.23494505
=1.0066

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)
=((628.7 + 908.4) / 2506.4) / ((548.1 + 846.4) / 2362.3)
=0.61327003 / 0.59031452
=1.0389

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
=(162.4 - -10.7 - 233.2) / 2506.4
=-0.024

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 -2.54 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

Sep04Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13
DSRI 0.92770.9831.03360.98210.98390.93731.01820.87711.06790.9507
GMI 0.96071.03591.02461.01331.110.9090.94871.0331.03980.9752
AQI 1.00271.01960.92460.97810.88850.96140.98820.95850.96251.0491
SGI 1.08491.12481.13841.06481.03831.05360.99950.90310.99660.9966
DEPI 0.89380.89981.07840.98990.91811.2081.07380.96741.06110.9413
SGAI 1.05391.04220.88281.03351.00351.06050.92251.031.02290.9297
LVGI 0.89810.84541.01811.6220.99710.89430.84661.14520.95340.8709
TATA -0.0559-0.04970.0034-0.04-0.0982-0.0501-0.04240.0229-0.0226-0.0934
M-score -2.74-2.56-2.30-2.84-2.92-2.74-2.62-2.63-2.50-2.91

Scotts Miracle Gro Co Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1.06620.8941.06790.93010.9191.1660.94710.99571.03451.0457
GMI 1.10081.10281.03981.01291.030.94260.97840.97960.92050.9791
AQI 0.95550.99160.96250.99621.03880.99951.04911.06011.01310.9542
SGI 0.93050.98960.99661.00140.92820.95321.00040.9991.08881.0514
DEPI 0.81290.9611.06111.10581.14261.05940.9760.97141.00851.0264
SGAI 1.01260.97981.02291.05091.02350.95420.9440.94460.93721.0066
LVGI 1.09841.03060.95340.93640.96450.94420.87090.94410.99481.0389
TATA 0.0023-0.0661-0.0226-0.0344-0.0494-0.0174-0.0934-0.0774-0.0238-0.024
M-score -2.49-2.86-2.50-2.67-2.79-2.45-2.91-2.81-2.50-2.54
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Email Hide