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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 -2.27 suggests that the company is not 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 -2.75.


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 * 1.017+0.528 * 1.013+0.404 * 1.2677+0.892 * 0.8921+0.115 * 0.8824
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0394+4.679 * 0.0411-0.327 * 0.9832
=-2.27

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

This Year (Nov16) TTM:Last Year (Nov15) TTM:
Accounts Receivable was $440 Mil.
Revenue was 3003 + 3865 + 5196 + 3946 = $16,010 Mil.
Gross Profit was 407 + 562 + 779 + 590 = $2,338 Mil.
Total Current Assets was $1,850 Mil.
Total Assets was $4,474 Mil.
Property, Plant and Equipment(Net PPE) was $1,014 Mil.
Depreciation, Depletion and Amortization(DDA) was $224 Mil.
Selling, General & Admin. Expense(SGA) was $2,000 Mil.
Total Current Liabilities was $2,597 Mil.
Long-Term Debt was $1,454 Mil.
Net Income was -26 + 31 + 46 + 52 = $103 Mil.
Non Operating Income was 1 + -81 + 1 + -390 = $-469 Mil.
Cash Flow from Operations was -62 + 157 + 121 + 172 = $388 Mil.
Accounts Receivable was $485 Mil.
Revenue was 4114 + 4062 + 5407 + 4364 = $17,947 Mil.
Gross Profit was 601 + 583 + 810 + 661 = $2,655 Mil.
Total Current Assets was $1,867 Mil.
Total Assets was $4,643 Mil.
Property, Plant and Equipment(Net PPE) was $1,458 Mil.
Depreciation, Depletion and Amortization(DDA) was $277 Mil.
Selling, General & Admin. Expense(SGA) was $2,157 Mil.
Total Current Liabilities was $1,786 Mil.
Long-Term Debt was $2,490 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)
=(440 / 16010) / (485 / 17947)
=0.02748282 / 0.02702402
=1.017

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)
=(2655 / 17947) / (2338 / 16010)
=0.14793559 / 0.14603373
=1.013

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 - (1850 + 1014) / 4474) / (1 - (1867 + 1458) / 4643)
=0.35985695 / 0.28386819
=1.2677

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
=16010 / 17947
=0.8921

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))
=(277 / (277 + 1458)) / (224 / (224 + 1014))
=0.15965418 / 0.180937
=0.8824

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)
=(2000 / 16010) / (2157 / 17947)
=0.12492192 / 0.12018722
=1.0394

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)
=((1454 + 2597) / 4474) / ((2490 + 1786) / 4643)
=0.90545373 / 0.92095628
=0.9832

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
=(103 - -469 - 388) / 4474
=0.0411

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 -2.27 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 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

Aug14Nov14Feb15May15Aug15Nov15Feb16May16Aug16Nov16
DSRI 0.40190.20670.93660.92250.88760.89440.95121.00031.02781.017
GMI -0.423-2.9720.99120.99040.98270.97340.98140.99380.99231.013
AQI 1.0040.9380.96140.9980.9951.05370.97870.94370.96741.2677
SGI 2.27324.73971.04391.04931.04761.03090.98370.96250.94920.8921
DEPI 0.2067-0.33811.03371.03331.01521.02071.03381.01461.01050.8824
SGAI -3.3955-0.33591.01651.03421.03450.99491.00241.00531.00711.0394
LVGI 1.00240.98360.97590.96580.96150.97370.96460.96310.96340.9832
TATA -0.1964-0.1824-0.0491-0.0574-0.0692-0.08460.03230.0270.04750.0411
M-score -2.90-2.77-2.74-2.77-2.87-2.93-2.39-2.40-2.28-2.27
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