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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.
During the past 13 years, the highest Beneish M-Score of Scotts Miracle Gro Co was -2.25. The lowest was -2.92. And the median was -2.62.
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 * 0.9554||+||0.528 * 1.0283||+||0.404 * 1.335||+||0.892 * 1.0617||+||0.115 * 0.973|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9667||+||4.679 * -0.0345||-||0.327 * 1.0808|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $355 Mil.|
Revenue was 483.2 + 1214.8 + 1102.3 + 216.2 = $3,017 Mil.
Gross Profit was 153.1 + 449.2 + 433.3 + 29.3 = $1,065 Mil.
Total Current Assets was $949 Mil.
Total Assets was $2,527 Mil.
Property, Plant and Equipment(Net PPE) was $454 Mil.
Depreciation, Depletion and Amortization(DDA) was $69 Mil.
Selling, General & Admin. Expense(SGA) was $698 Mil.
Total Current Liabilities was $613 Mil.
Long-Term Debt was $1,029 Mil.
Net Income was -23.6 + 133.4 + 124.6 + -74.6 = $160 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 222.7 + 672.9 + -381.7 + -267 = $247 Mil.
|Accounts Receivable was $350 Mil.
Revenue was 454.3 + 1116.4 + 1081 + 189.6 = $2,841 Mil.
Gross Profit was 140.4 + 423.3 + 433.8 + 33.9 = $1,031 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 $64 Mil.
Selling, General & Admin. Expense(SGA) was $680 Mil.
Total Current Liabilities was $545 Mil.
Long-Term Debt was $692 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(355.4 / 3016.5)||/||(350.4 / 2841.3)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(449.2 / 2841.3)||/||(153.1 / 3016.5)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (948.6 + 453.7) / 2527.2)||/||(1 - (935 + 437) / 2058.3)|
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.
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))|
|=||(64.4 / (64.4 + 437))||/||(69 / (69 + 453.7))|
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)|
|=||(698.3 / 3016.5)||/||(680.4 / 2841.3)|
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)|
|=||((1028.5 + 613.1) / 2527.2)||/||((692.4 + 544.7) / 2058.3)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(159.8 - 0||-||246.9)||/||2527.2|
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 -2.50 suggests that the company will not be a manipulator.
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
Scotts Miracle Gro Co Annual Data
Scotts Miracle Gro Co Quarterly Data