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The Scotts Miracle Gro Co (NYSE:SMG)
Beneish M-Score
-2.19 (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 -2.19 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: -2.19

-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 * 0.9198+0.528 * 0.9251+0.404 * 1.2708+0.892 * 1.1035+0.115 * 0.951
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0646+4.679 * 0.042-0.327 * 0.943
=-2.19

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $795 Mil.
Revenue was 994.1 + 1245.2 + 245.7 + 663.9 = $3,149 Mil.
Gross Profit was 357.4 + 521.6 + 42.6 + 247.7 = $1,169 Mil.
Total Current Assets was $1,481 Mil.
Total Assets was $3,260 Mil.
Property, Plant and Equipment(Net PPE) was $450 Mil.
Depreciation, Depletion and Amortization(DDA) was $73 Mil.
Selling, General & Admin. Expense(SGA) was $752 Mil.
Total Current Liabilities was $991 Mil.
Long-Term Debt was $1,130 Mil.
Net Income was 213.1 + 210.1 + -81.3 + -23.6 = $318 Mil.
Non Operating Income was -3.5 + 0 + -8.8 + 0 = $-12 Mil.
Cash Flow from Operations was 598.9 + -289.2 + -338.6 + 222.7 = $194 Mil.
Accounts Receivable was $783 Mil.
Revenue was 1111.3 + 1071.8 + 216.2 + 454.3 = $2,854 Mil.
Gross Profit was 385.8 + 424.8 + 29.3 + 140.4 = $980 Mil.
Total Current Assets was $1,612 Mil.
Total Assets was $3,018 Mil.
Property, Plant and Equipment(Net PPE) was $438 Mil.
Depreciation, Depletion and Amortization(DDA) was $67 Mil.
Selling, General & Admin. Expense(SGA) was $640 Mil.
Total Current Liabilities was $1,348 Mil.
Long-Term Debt was $735 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)
=(794.8 / 3148.9) / (783.1 / 2853.6)
=0.2524056 / 0.27442529
=0.9198

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)
=(980.3 / 2853.6) / (1169.3 / 3148.9)
=0.34353098 / 0.37133602
=0.9251

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 - (1481.1 + 449.6) / 3259.7) / (1 - (1611.9 + 437.9) / 3018.1)
=0.40770623 / 0.32083099
=1.2708

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
=3148.9 / 2853.6
=1.1035

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))
=(66.9 / (66.9 + 437.9)) / (72.8 / (72.8 + 449.6))
=0.13252773 / 0.13935681
=0.951

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)
=(751.5 / 3148.9) / (639.7 / 2853.6)
=0.23865477 / 0.22417297
=1.0646

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)
=((1130.3 + 991.2) / 3259.7) / ((734.9 + 1348.2) / 3018.1)
=0.65082676 / 0.69020245
=0.943

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
=(318.3 - -12.3 - 193.8) / 3259.7
=0.042

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 -2.19 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

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 1.03641.0511.05271.06840.95421.03190.94081.03230.97390.9198
GMI 0.91880.97210.96830.99031.02621.05381.02241.00580.97090.9251
AQI 1.01310.95421.0190.96520.80891.23331.3351.33161.55341.2708
SGI 1.08691.04611.02041.0361.00611.01171.07811.07841.14251.1035
DEPI 1.04641.06511.05370.99280.98210.96470.9730.94840.90420.951
SGAI 0.91970.99120.99181.02051.00750.95360.99840.9920.98221.0646
LVGI 0.99481.03891.17861.13941.03681.12541.08081.04091.02190.943
TATA -0.0238-0.024-0.03090.0063-0.0167-0.0207-0.0345-0.0049-0.00550.042
M-score -2.50-2.54-2.62-2.42-2.67-2.45-2.51-2.28-2.21-2.19
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