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The Scotts Miracle Gro Co (NYSE:SMG)
Beneish M-Score
-2.08 (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 -2.08 signals that the company is a manipulator.

SMG' s Beneish M-Score Range Over the Past 10 Years
Min: -2.91   Max: -1.75
Current: -2.08

-2.91
-1.75

During the past 13 years, the highest Beneish M-Score of The Scotts Miracle Gro Co was -1.75. The lowest was -2.91. 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 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 * 1.1482+0.528 * 0.9483+0.404 * 1.2567+0.892 * 1.0406+0.115 * 0.9959
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.009+4.679 * 0.0281-0.327 * 0.9439
=-2.08

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $371 Mil.
Revenue was 402.3 + 994.1 + 1245.2 + 245.7 = $2,887 Mil.
Gross Profit was 99.7 + 357.4 + 521.6 + 42.6 = $1,021 Mil.
Total Current Assets was $992 Mil.
Total Assets was $2,809 Mil.
Property, Plant and Equipment(Net PPE) was $471 Mil.
Depreciation, Depletion and Amortization(DDA) was $74 Mil.
Selling, General & Admin. Expense(SGA) was $576 Mil.
Total Current Liabilities was $593 Mil.
Long-Term Debt was $1,131 Mil.
Net Income was -26.6 + 213.1 + 210.1 + -81.3 = $315 Mil.
Non Operating Income was 11.3 + -3.5 + 0 + -8.8 = $-1 Mil.
Cash Flow from Operations was 266.3 + 598.9 + -289.2 + -338.6 = $237 Mil.
Accounts Receivable was $311 Mil.
Revenue was 375.4 + 1111.3 + 1071.8 + 216.2 = $2,775 Mil.
Gross Profit was 90.8 + 385.8 + 424.8 + 29.3 = $931 Mil.
Total Current Assets was $1,119 Mil.
Total Assets was $2,527 Mil.
Property, Plant and Equipment(Net PPE) was $444 Mil.
Depreciation, Depletion and Amortization(DDA) was $69 Mil.
Selling, General & Admin. Expense(SGA) was $548 Mil.
Total Current Liabilities was $619 Mil.
Long-Term Debt was $1,025 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)
=(371.1 / 2887.3) / (310.6 / 2774.7)
=0.12852838 / 0.11194003
=1.1482

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)
=(930.7 / 2774.7) / (1021.3 / 2887.3)
=0.33542365 / 0.35372147
=0.9483

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 - (991.7 + 470.8) / 2808.8) / (1 - (1119.2 + 444.1) / 2527.2)
=0.47931501 / 0.38141026
=1.2567

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
=2887.3 / 2774.7
=1.0406

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))
=(69 / (69 + 444.1)) / (73.5 / (73.5 + 470.8))
=0.13447671 / 0.13503583
=0.9959

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)
=(575.7 / 2887.3) / (548.3 / 2774.7)
=0.19939043 / 0.19760695
=1.009

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)
=((1131.1 + 593.1) / 2808.8) / ((1025 + 618.6) / 2527.2)
=0.61385645 / 0.65036404
=0.9439

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
=(315.3 - -1 - 237.4) / 2808.8
=0.0281

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 -2.08 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 local exchange's currency.

The Scotts Miracle Gro Co Annual Data

Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15Sep16
DSRI 0.98210.98390.93731.01820.87711.02630.98921.17340.83781.1492
GMI 1.01331.110.9090.94871.0331.03980.97521.01041.03720.9483
AQI 0.97810.88850.96140.98820.95850.96251.04911.0191.14391.2567
SGI 1.06481.03831.05360.99950.90310.99660.99660.91541.05811.0396
DEPI 0.98990.91811.2081.07380.96741.06110.94131.05370.95510.9959
SGAI 1.03350.98611.07930.92251.031.02290.92970.84540.95011.0008
LVGI 1.6220.99710.89430.84661.14520.95340.87091.17861.08210.9439
TATA -0.0504-0.0982-0.0501-0.04240.0229-0.0226-0.0934-0.0309-0.03450.0281
M-score -2.89-2.91-2.74-2.62-2.63-2.54-2.88-2.55-2.68-2.08

The Scotts Miracle Gro Co Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 1.50881.17031.19281.06091.14320.82581.03410.970.91921.1482
GMI 0.96611.01191.03351.0751.11331.02771.00980.9660.9150.9483
AQI 0.95421.0190.96520.80891.23331.14391.33161.55341.27081.2567
SGI 1.03060.91780.9280.90490.91321.07331.07651.14711.10411.0406
DEPI 1.06511.05371.02810.98210.96470.95510.94840.90420.9510.9959
SGAI 0.92440.86640.85910.85420.80820.97170.98770.98761.09151.009
LVGI 1.03891.17861.13941.03681.12541.08211.04091.02190.9430.9439
TATA -0.024-0.03090.0063-0.0167-0.0207-0.0345-0.0049-0.00550.0420.0281
M-score -2.13-2.56-2.35-2.61-2.38-2.69-2.28-2.21-2.20-2.08
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