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Scotts Miracle Gro Co (NYSE:SMG)
Beneish M-Score
-2.15 (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 -2.15 signals that the company is a manipulator.

SMG' s 10-Year Beneish M-Score Range
Min: -2.88   Max: -2.15
Current: -2.15

-2.88
-2.15

During the past 13 years, the highest Beneish M-Score of Scotts Miracle Gro Co was -2.15. The lowest was -2.88. And the median was -2.63.


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 * 1.0238+0.528 * 0.9622+0.404 * 1.019+0.892 * 1.0112+0.115 * 1.3675
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.019+4.679 * 0.0696-0.327 * 1.1786
=-2.15

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $338 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 $48 Mil.
Selling, General & Admin. Expense(SGA) was $681 Mil.
Total Current Liabilities was $545 Mil.
Long-Term Debt was $692 Mil.
Net Income was -14.9 + 121.7 + 125.7 + -65.6 = $167 Mil.
Non Operating Income was 0 + 0 + -10.7 + 0 = $-11 Mil.
Cash Flow from Operations was 0 + 648.9 + -434.4 + -180.2 = $34 Mil.
Accounts Receivable was $326 Mil.
Revenue was 443 + 1148.1 + 1019.6 + 205.8 = $2,817 Mil.
Gross Profit was 130.8 + 441.8 + 378.7 + 31.1 = $982 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 $661 Mil.
Total Current Liabilities was $510 Mil.
Long-Term Debt was $478 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)
=(337.7 / 2848.1) / (326.2 / 2816.5)
=0.11857027 / 0.1158175
=1.0238

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)
=(423.3 / 2816.5) / (140.4 / 2848.1)
=0.3488017 / 0.36248727
=0.9622

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 - (935 + 437) / 2058.3) / (1 - (881 + 422.3) / 1937.2)
=0.3334305 / 0.32722486
=1.019

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
=2848.1 / 2816.5
=1.0112

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)) / (48 / (48 + 437))
=0.13533989 / 0.09896907
=1.3675

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)
=(681.2 / 2848.1) / (661.1 / 2816.5)
=0.239177 / 0.23472395
=1.019

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)
=0.60102998 / 0.50996283
=1.1786

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
=(166.9 - -10.7 - 34.3) / 2058.3
=0.0696

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 -2.15 signals that the company is likely to 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 0.9511.03360.98210.98390.93731.01820.87711.02630.9892
GMI 1.04011.02461.01331.110.9090.94871.0331.03980.9752
AQI 1.01960.92460.97810.88850.96140.98820.95850.96251.0491
SGI 1.16261.13841.06481.03831.05360.99950.90310.99660.9966
DEPI 0.89981.07840.98990.91811.2081.07380.96741.06110.9413
SGAI 0.96550.88281.03350.98611.07930.92251.031.02290.9297
LVGI 0.84541.01811.6220.99710.89430.84661.14520.95340.8709
TATA -0.04970.0034-0.04-0.0407-0.0501-0.04240.0229-0.0226-0.0934
M-score -2.54-2.30-2.84-2.64-2.74-2.62-2.63-2.54-2.88

Scotts Miracle Gro Co Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.8941.02630.93010.67580.81760.98920.99951.41791.50881.0238
GMI 1.10281.03981.01291.03280.94750.97520.97640.91260.96610.9622
AQI 0.99160.96250.99621.03880.99951.04911.06011.01310.95421.019
SGI 0.98960.99661.00140.93230.96110.99660.99521.07561.03061.0112
DEPI 0.9611.06111.10581.10131.02090.94130.93811.04641.06511.3675
SGAI 0.97981.02291.05091.04120.98790.92970.93030.90990.96571.019
LVGI 1.03060.95340.93640.96450.94420.87090.94410.99481.03891.1786
TATA -0.0661-0.0226-0.0344-0.0494-0.0174-0.0934-0.0774-0.0238-0.0240.0696
M-score -2.86-2.54-2.67-3.02-2.77-2.88-2.81-2.16-2.13-2.15
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