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Scotts Miracle Gro Co (NYSE:SMG)
Beneish M-Score
-2.55 (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 -2.55 suggests that the company is not a manipulator.

SMG' s 10-Year Beneish M-Score Range
Min: -3.27   Max: -1.93
Current: -2.55

-3.27
-1.93

During the past 13 years, the highest Beneish M-Score of Scotts Miracle Gro Co was -1.93. The lowest was -3.27. And the median was -2.59.


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 * 1.0541+0.528 * 0.9691+0.404 * 0.9542+0.892 * 1.043+0.115 * 1.0651
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0139+4.679 * -0.024-0.327 * 1.0389
=-2.55

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $750 Mil.
Revenue was 1116.4 + 1081 + 196.4 + 476.4 = $2,870 Mil.
Gross Profit was 423.3 + 433.8 + 34.9 + 134.3 = $1,026 Mil.
Total Current Assets was $1,411 Mil.
Total Assets was $2,506 Mil.
Property, Plant and Equipment(Net PPE) was $443 Mil.
Depreciation, Depletion and Amortization(DDA) was $65 Mil.
Selling, General & Admin. Expense(SGA) was $679 Mil.
Total Current Liabilities was $908 Mil.
Long-Term Debt was $629 Mil.
Net Income was 121.7 + 125.7 + -65.6 + -19.4 = $162 Mil.
Non Operating Income was 0 + -10.7 + 0 + 0 = $-11 Mil.
Cash Flow from Operations was 648.9 + -434.4 + -180.2 + 198.9 = $233 Mil.
Accounts Receivable was $682 Mil.
Revenue was 1137.1 + 1007.9 + 205.8 + 401.2 = $2,752 Mil.
Gross Profit was 440.3 + 377.2 + 31.1 + 105 = $954 Mil.
Total Current Assets was $1,309 Mil.
Total Assets was $2,362 Mil.
Property, Plant and Equipment(Net PPE) was $410 Mil.
Depreciation, Depletion and Amortization(DDA) was $65 Mil.
Selling, General & Admin. Expense(SGA) was $642 Mil.
Total Current Liabilities was $846 Mil.
Long-Term Debt was $548 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)
=(750.1 / 2870.2) / (682.3 / 2752)
=0.26134067 / 0.24792878
=1.0541

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)
=(433.8 / 2752) / (423.3 / 2870.2)
=0.34651163 / 0.3575709
=0.9691

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 - (1411 + 443.4) / 2506.4) / (1 - (1308.5 + 409.8) / 2362.3)
=0.26013406 / 0.27261567
=0.9542

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
=2870.2 / 2752
=1.043

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))
=(64.6 / (64.6 + 409.8)) / (65 / (65 + 443.4))
=0.13617201 / 0.12785208
=1.0651

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)
=(678.8 / 2870.2) / (641.9 / 2752)
=0.2364992 / 0.23324855
=1.0139

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)
=((628.7 + 908.4) / 2506.4) / ((548.1 + 846.4) / 2362.3)
=0.61327003 / 0.59031452
=1.0389

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
=(162.4 - -10.7 - 233.2) / 2506.4
=-0.024

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 -2.55 suggests that the company will not 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

Sep04Sep05Sep06Sep07Sep08Sep09Sep10Sep11Sep12Sep13
DSRI 0.92770.9831.03360.98210.98390.98780.89940.95431.05440.9507
GMI 0.96071.03591.02461.01331.110.88810.95571.02991.05970.9752
AQI 1.00271.01960.92460.97810.88850.96140.89771.05510.96251.0491
SGI 1.08491.12481.13841.06481.03830.99960.97230.96611.00940.9966
DEPI 0.89380.89981.07840.98990.91811.2081.04190.9971.06110.9413
SGAI 1.05391.04220.88281.03351.00351.04060.94911.03021.01310.9297
LVGI 0.89810.84541.01811.6220.99710.89430.8561.13260.95340.8709
TATA -0.0559-0.04970.0034-0.04-0.0982-0.0501-0.04240.0229-0.0226-0.0934
M-score -2.74-2.56-2.30-2.84-2.92-2.75-2.80-2.46-2.49-2.91

Scotts Miracle Gro Co Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1.04320.89561.05440.91060.89771.13330.94710.99981.04031.0541
GMI 1.08161.07541.05971.04281.06040.98070.97840.97480.91570.9691
AQI 0.95550.99160.96250.99621.03880.99951.04911.06011.01310.9542
SGI 0.9510.98781.00941.02280.95010.98071.00040.99491.08281.043
DEPI 1.02540.9611.06110.9881.02521.02090.94131.04661.04641.0651
SGAI 1.02590.99891.01311.03381.00480.93170.9440.94780.94151.0139
LVGI 1.09841.03060.95340.93640.96450.94420.87090.94410.99481.0389
TATA 0.0023-0.0661-0.0226-0.0344-0.0494-0.0174-0.0934-0.0774-0.0238-0.024
M-score -2.48-2.87-2.49-2.67-2.79-2.43-2.91-2.80-2.50-2.55
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