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GuruFocus has detected 7 Warning Signs with Schweitzer-Mauduit International Inc $SWM.
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Schweitzer-Mauduit International Inc (NYSE:SWM)
Beneish M-Score
-2.66 (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.

Schweitzer-Mauduit International Inc has a M-score of -2.66 suggests that the company is not a manipulator.

SWM' s Beneish M-Score Range Over the Past 10 Years
Min: -3.22   Max: -2.2
Current: -2.66

-3.22
-2.2

During the past 13 years, the highest Beneish M-Score of Schweitzer-Mauduit International Inc was -2.20. The lowest was -3.22. And the median was -2.69.


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 Schweitzer-Mauduit International 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 * 0.9144+0.528 * 0.9609+0.404 * 1.0273+0.892 * 1.0992+0.115 * 0.9287
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0539+4.679 * -0.0433-0.327 * 0.8857
=-2.66

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

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $98.2 Mil.
Revenue was 198.7 + 209.3 + 217.3 + 214.6 = $839.9 Mil.
Gross Profit was 63.2 + 63.1 + 66.9 + 63.5 = $256.7 Mil.
Total Current Assets was $364.3 Mil.
Total Assets was $1,173.7 Mil.
Property, Plant and Equipment(Net PPE) was $307.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $44.5 Mil.
Selling, General & Admin. Expense(SGA) was $107.5 Mil.
Total Current Liabilities was $135.8 Mil.
Long-Term Debt was $437.4 Mil.
Net Income was 17 + 18.7 + 26 + 21.1 = $82.8 Mil.
Non Operating Income was -0.1 + 0.7 + 1 + 2.3 = $3.9 Mil.
Cash Flow from Operations was 46.7 + 30.8 + 34.6 + 17.6 = $129.7 Mil.
Accounts Receivable was $97.7 Mil.
Revenue was 209.8 + 184.4 + 181.9 + 188 = $764.1 Mil.
Gross Profit was 65.8 + 52.4 + 54.8 + 51.4 = $224.4 Mil.
Total Current Assets was $444.8 Mil.
Total Assets was $1,290.0 Mil.
Property, Plant and Equipment(Net PPE) was $308.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $41.0 Mil.
Selling, General & Admin. Expense(SGA) was $92.8 Mil.
Total Current Liabilities was $143.1 Mil.
Long-Term Debt was $568.2 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)
=(98.2 / 839.9) / (97.7 / 764.1)
=0.11691868 / 0.12786285
=0.9144

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)
=(224.4 / 764.1) / (256.7 / 839.9)
=0.29367884 / 0.30563162
=0.9609

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 - (364.3 + 307.4) / 1173.7) / (1 - (444.8 + 308.1) / 1290)
=0.42770725 / 0.41635659
=1.0273

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
=839.9 / 764.1
=1.0992

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))
=(41 / (41 + 308.1)) / (44.5 / (44.5 + 307.4))
=0.11744486 / 0.12645638
=0.9287

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)
=(107.5 / 839.9) / (92.8 / 764.1)
=0.12799143 / 0.12145007
=1.0539

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)
=((437.4 + 135.8) / 1173.7) / ((568.2 + 143.1) / 1290)
=0.48837011 / 0.55139535
=0.8857

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
=(82.8 - 3.9 - 129.7) / 1173.7
=-0.0433

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.

Schweitzer-Mauduit International Inc has a M-score of -2.66 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.

Schweitzer-Mauduit International Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.03730.8050.76911.10461.11770.83591.11670.87141.46130.9144
GMI 0.84881.12530.5150.97240.87070.92481.01941.18710.9380.9609
AQI 1.46121.37020.90630.98950.92921.10142.07461.06011.62511.0273
SGI 1.0911.07430.93711.01071.08390.98760.99271.02780.9621.0992
DEPI 1.21630.65171.05551.19680.9221.02151.01010.78210.94330.9287
SGAI 1.05850.89411.27330.95381.13070.9830.93761.14651.14981.0539
LVGI 1.09631.20240.61430.93731.23380.94271.3681.09731.16870.8857
TATA -0.0875-0.0401-0.0337-0.08950.0162-0.1083-0.0878-0.0722-0.0521-0.0433
M-score -2.68-2.65-3.11-2.76-2.43-3.12-2.45-2.87-2.20-2.66

Schweitzer-Mauduit International Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.23770.87140.91090.8981.0011.46131.1771.08570.99480.9144
GMI 1.16041.18711.15661.11161.01430.9380.91410.91530.92620.9609
AQI 2.06541.06011.12431.14471.0931.62511.52331.57741.67561.0273
SGI 1.04941.02780.99310.95670.90970.9621.01681.09291.15631.0992
DEPI 0.82070.78210.84960.86820.98020.94330.95840.91680.86930.9287
SGAI 1.04831.14651.13031.13811.0781.14981.11961.05791.17961.0539
LVGI 1.63671.09731.06521.00480.99141.16871.08151.08571.02350.8857
TATA -0.0768-0.0722-0.0742-0.0847-0.0717-0.0521-0.0538-0.0433-0.0554-0.0433
M-score -2.30-2.87-2.84-2.93-2.86-2.20-2.44-2.38-2.42-2.66
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