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GuruFocus has detected 2 Warning Signs with SUPERVALU Inc $SVU.
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SUPERVALU Inc (NYSE:SVU)
Beneish M-Score
-2.10 (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.

SUPERVALU Inc has a M-score of -2.10 signals that the company is a manipulator.

SVU' s Beneish M-Score Range Over the Past 10 Years
Min: -3.84   Max: -0.87
Current: -2.1

-3.84
-0.87

During the past 13 years, the highest Beneish M-Score of SUPERVALU Inc was -0.87. The lowest was -3.84. And the median was -2.73.


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 SUPERVALU Inc 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 * 0.9783+0.528 * 1.0061+0.404 * 0.7371+0.892 * 0.9718+0.115 * 0.998
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0566+4.679 * 0.1022-0.327 * 0.8249
=-2.10

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

This Year (Feb17) TTM:Last Year (Feb16) TTM:
Accounts Receivable was $386 Mil.
Revenue was 2907 + 3003 + 3865 + 5196 = $14,971 Mil.
Gross Profit was 435 + 407 + 562 + 779 = $2,183 Mil.
Total Current Assets was $1,541 Mil.
Total Assets was $3,580 Mil.
Property, Plant and Equipment(Net PPE) was $1,004 Mil.
Depreciation, Depletion and Amortization(DDA) was $207 Mil.
Selling, General & Admin. Expense(SGA) was $1,911 Mil.
Total Current Liabilities was $1,229 Mil.
Long-Term Debt was $1,449 Mil.
Net Income was 599 + -26 + 31 + 46 = $650 Mil.
Non Operating Income was 2 + 1 + -81 + 1 = $-77 Mil.
Cash Flow from Operations was 145 + -62 + 157 + 121 = $361 Mil.
Accounts Receivable was $406 Mil.
Revenue was 2891 + 3045 + 4062 + 5407 = $15,405 Mil.
Gross Profit was 431 + 436 + 583 + 810 = $2,260 Mil.
Total Current Assets was $1,635 Mil.
Total Assets was $4,370 Mil.
Property, Plant and Equipment(Net PPE) was $1,021 Mil.
Depreciation, Depletion and Amortization(DDA) was $210 Mil.
Selling, General & Admin. Expense(SGA) was $1,861 Mil.
Total Current Liabilities was $1,572 Mil.
Long-Term Debt was $2,391 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)
=(386 / 14971) / (406 / 15405)
=0.02578318 / 0.02635508
=0.9783

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)
=(2260 / 15405) / (2183 / 14971)
=0.14670562 / 0.14581524
=1.0061

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 - (1541 + 1004) / 3580) / (1 - (1635 + 1021) / 4370)
=0.28910615 / 0.39221968
=0.7371

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
=14971 / 15405
=0.9718

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))
=(210 / (210 + 1021)) / (207 / (207 + 1004))
=0.17059301 / 0.17093311
=0.998

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)
=(1911 / 14971) / (1861 / 15405)
=0.12764678 / 0.12080493
=1.0566

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)
=((1449 + 1229) / 3580) / ((2391 + 1572) / 4370)
=0.74804469 / 0.90686499
=0.8249

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
=(650 - -77 - 361) / 3580
=0.1022

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.

SUPERVALU Inc has a M-score of -2.10 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.

SUPERVALU Inc Annual Data

Feb08Feb09Feb10Feb11Feb12Feb13Feb14Feb15Feb16Feb17
DSRI 0.84390.90841.02240.98731.02151.34791.05441.26330.86650.9833
GMI 0.94851.01091.00651.00621.00871.65550.90911.03250.98461.014
AQI 1.09520.76141.02230.78270.75382.8190.52880.93471.37590.7371
SGI 1.17761.01170.9110.92460.96180.47361.00340.77390.97210.9669
DEPI 0.79510.96611.0270.97581.0070.69021.05291.27450.77210.998
SGAI 1.04641.02660.99811.02230.9830.72650.86171.00730.981.0467
LVGI 0.9721.13540.96341.0821.06530.82751.48680.97530.96310.8249
TATA -0.0541-0.2493-0.0658-0.1943-0.1739-0.21420.0373-0.0496-0.05740.0793
M-score -2.73-3.86-2.82-3.59-3.42-2.48-2.62-2.64-2.76-2.20

SUPERVALU Inc Quarterly Data

Nov14Feb15May15Aug15Nov15Feb16May16Aug16Nov16Feb17
DSRI 0.20671.26411.24091.1931.30920.72190.84760.8730.74380.9783
GMI -2.9721.00180.99630.9880.97980.97580.99270.99151.00871.0061
AQI 0.9380.93470.9980.9951.05371.37590.94370.96741.26770.7371
SGI 4.73970.77340.78010.77950.70431.16681.13591.11751.21970.9718
DEPI -0.33811.27451.28041.25911.6030.77211.03171.02750.59730.998
SGAI -0.33591.04461.06461.06551.02150.97260.9750.97661.01171.0566
LVGI 0.98360.97530.96580.96150.97370.96310.96310.96340.98320.8249
TATA -0.1824-0.0496-0.0574-0.0501-0.0657-0.0373-0.0425-0.0424-0.04650.1022
M-score -2.77-2.66-2.69-2.71-2.68-2.63-2.70-2.69-2.67-2.10
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