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The Scotts Miracle Gro Co (NYSE:SMG)
Beneish M-Score
-2.20 (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 -2.20 signals that the company is a manipulator.

SMG' s Beneish M-Score Range Over the Past 10 Years
Min: -3.27   Max: -1.92
Current: -2.2

-3.27
-1.92

During the past 13 years, the highest Beneish M-Score of The Scotts Miracle Gro Co was -1.92. 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 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 * 0.9975+0.528 * 0.9733+0.404 * 1.5534+0.892 * 1.1155+0.115 * 0.9042
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9381+4.679 * -0.0055-0.327 * 1.0219
=-2.20

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $1,163 Mil.
Revenue was 1245.2 + 245.7 + 483.2 + 1214.8 = $3,189 Mil.
Gross Profit was 521.6 + 42.6 + 153.1 + 449.2 = $1,167 Mil.
Total Current Assets was $2,209 Mil.
Total Assets was $3,686 Mil.
Property, Plant and Equipment(Net PPE) was $436 Mil.
Depreciation, Depletion and Amortization(DDA) was $74 Mil.
Selling, General & Admin. Expense(SGA) was $705 Mil.
Total Current Liabilities was $986 Mil.
Long-Term Debt was $1,765 Mil.
Net Income was 210.1 + -81.3 + -23.6 + 133.4 = $239 Mil.
Non Operating Income was 0 + -8.8 + 0 + 0 = $-9 Mil.
Cash Flow from Operations was -289.2 + -338.6 + 222.7 + 672.9 = $268 Mil.
Accounts Receivable was $1,045 Mil.
Revenue was 1071.8 + 216.2 + 454.3 + 1116.4 = $2,859 Mil.
Gross Profit was 424.8 + 29.3 + 140.4 + 423.3 = $1,018 Mil.
Total Current Assets was $2,036 Mil.
Total Assets was $3,010 Mil.
Property, Plant and Equipment(Net PPE) was $427 Mil.
Depreciation, Depletion and Amortization(DDA) was $64 Mil.
Selling, General & Admin. Expense(SGA) was $674 Mil.
Total Current Liabilities was $991 Mil.
Long-Term Debt was $1,208 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)
=(1163.1 / 3188.9) / (1045.3 / 2858.7)
=0.36473392 / 0.36565572
=0.9975

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)
=(1017.8 / 2858.7) / (1166.5 / 3188.9)
=0.35603596 / 0.36580012
=0.9733

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 - (2208.8 + 436.3) / 3685.6) / (1 - (2035.6 + 427.2) / 3009.8)
=0.28231496 / 0.18173965
=1.5534

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
=3188.9 / 2858.7
=1.1155

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))
=(64.3 / (64.3 + 427.2)) / (73.8 / (73.8 + 436.3))
=0.13082401 / 0.14467751
=0.9042

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)
=(705.2 / 3188.9) / (673.9 / 2858.7)
=0.22114209 / 0.23573652
=0.9381

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)
=((1764.8 + 985.9) / 3685.6) / ((1207.5 + 990.6) / 3009.8)
=0.7463371 / 0.73031431
=1.0219

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
=(238.6 - -8.8 - 267.8) / 3685.6
=-0.0055

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 -2.20 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.

The Scotts Miracle Gro Co Annual Data

Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15
DSRI 1.03360.98210.98390.98780.89940.95431.07550.94631.04860.9554
GMI 1.02461.01331.110.88810.95571.02991.0440.9790.97151.0283
AQI 0.92460.97810.88850.96140.89771.05510.96251.04911.0191.335
SGI 1.13841.06481.03830.99960.97230.96610.98961.00121.02441.0617
DEPI 1.07840.98990.91811.2081.04190.9971.06110.94131.05370.973
SGAI 0.88281.03351.00351.04060.94911.03021.02990.92651.00710.9667
LVGI 1.01811.6220.99710.89430.8561.13260.95340.87091.17861.0808
TATA -0.0224-0.0504-0.0982-0.0501-0.04240.0223-0.0226-0.0934-0.0309-0.0345
M-score -2.42-2.89-2.92-2.75-2.80-2.46-2.50-2.91-2.62-2.50

The Scotts Miracle Gro Co Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.99771.03641.0511.05271.06840.95421.03370.96511.05880.9975
GMI 0.97720.91880.97210.96830.99031.02621.02571.02611.00930.9733
AQI 1.06011.01310.95421.0190.96520.80891.43931.3351.33161.5534
SGI 0.99691.08691.04611.02041.0361.00611.04841.05091.05151.1155
DEPI 1.04661.04641.06511.05370.99280.98210.98380.9730.94840.9042
SGAI 0.92690.91970.99120.99181.02051.00750.97380.95290.94780.9381
LVGI 0.94410.99481.03891.17861.13941.03681.12451.08081.04091.0219
TATA -0.0774-0.0238-0.024-0.03090.0063-0.0167-0.0207-0.0345-0.0049-0.0055
M-score -2.80-2.50-2.54-2.62-2.42-2.67-2.35-2.50-2.27-2.20
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