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Safeway Inc (NYSE:SWY)
Beneish M-Score
-0.90 (As of Today)

Warning Sign:

Beneish M-Score -0.90 higher than -2.22, which implies that it might have manipulated its financial results.

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.

Safeway Inc has a M-score of -0.90 signals that the company is a manipulator.

SWY' s 10-Year Beneish M-Score Range
Min: -4.21   Max: -0.9
Current: -0.9

-4.21
-0.9

During the past 13 years, the highest Beneish M-Score of Safeway Inc was -0.90. The lowest was -4.21. And the median was -2.71.


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 Safeway 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 * 1.2397+0.528 * 1.0073+0.404 * 1.0461+0.892 * 0.8566+0.115 * 1.0578
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0089+4.679 * 0.2894-0.327 * 0.6635
=-0.90

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $591 Mil.
Revenue was 8307.9 + 8307.2 + 8260.9 + 10314.3 = $35,190 Mil.
Gross Profit was 2174.6 + 2139.5 + 2160.2 + 2730.4 = $9,205 Mil.
Total Current Assets was $4,539 Mil.
Total Assets was $12,801 Mil.
Property, Plant and Equipment(Net PPE) was $7,309 Mil.
Depreciation, Depletion and Amortization(DDA) was $900 Mil.
Selling, General & Admin. Expense(SGA) was $8,622 Mil.
Total Current Liabilities was $2,897 Mil.
Long-Term Debt was $2,743 Mil.
Net Income was 9.5 + 95.6 + -97.6 + 3314.4 = $3,322 Mil.
Non Operating Income was -81.5 + 53.6 + -139.3 + -54.8 = $-222 Mil.
Cash Flow from Operations was 367.1 + 523.6 + -1986.6 + 934.8 = $-161 Mil.
Accounts Receivable was $557 Mil.
Revenue was 8622 + 8696.1 + 9994 + 13767.5 = $41,080 Mil.
Gross Profit was 2225.3 + 2281.3 + 2668.5 + 3648.9 = $10,824 Mil.
Total Current Assets was $5,650 Mil.
Total Assets was $14,408 Mil.
Property, Plant and Equipment(Net PPE) was $7,732 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,015 Mil.
Selling, General & Admin. Expense(SGA) was $9,976 Mil.
Total Current Liabilities was $5,338 Mil.
Long-Term Debt was $4,228 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)
=(591.4 / 35190.3) / (556.9 / 41079.6)
=0.01680577 / 0.01355661
=1.2397

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)
=(2139.5 / 41079.6) / (2174.6 / 35190.3)
=0.26348845 / 0.26156924
=1.0073

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 - (4539.1 + 7308.8) / 12800.8) / (1 - (5650 + 7732.4) / 14407.6)
=0.07444066 / 0.07115689
=1.0461

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
=35190.3 / 41079.6
=0.8566

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))
=(1014.8 / (1014.8 + 7732.4)) / (900.3 / (900.3 + 7308.8))
=0.11601427 / 0.10967097
=1.0578

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)
=(8621.7 / 35190.3) / (9976 / 41079.6)
=0.24500217 / 0.2428456
=1.0089

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)
=((2742.8 + 2897.1) / 12800.8) / ((4228.4 + 5338.1) / 14407.6)
=0.44058965 / 0.66398984
=0.6635

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
=(3321.9 - -222 - -161.1) / 12800.8
=0.2894

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.

Safeway Inc has a M-score of -0.90 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 own currency.

Safeway Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.8780.96441.25761.19080.85461.09491.06181.10071.37581.6302
GMI 1.00181.02241.00381.00281.01280.99131.01231.04611.01961.0092
AQI 0.95310.93390.96080.94920.95740.34891.16021.24931.0410.8201
SGI 1.00761.07241.0461.05231.0430.92621.00491.06291.01320.8175
DEPI 0.99861.00441.01171.00610.95030.9470.9740.98570.97260.9839
SGAI 1.01310.97960.9640.98840.98481.04781.00480.95990.9831.0207
LVGI 0.92390.97130.94560.93690.94831.09210.98961.12091.05420.8424
TATA -0.1105-0.0861-0.0824-0.0749-0.0741-0.2442-0.0845-0.1013-0.06830.133
M-score -3.10-2.85-2.58-2.60-2.92-3.91-2.74-2.71-2.43-1.46

Safeway Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.09441.09311.37581.13331.03381.06381.56571.25770.64581.2397
GMI 1.03751.03271.01961.01491.00851.00861.00711.01141.01581.0073
AQI 1.26851.27431.0410.9530.84360.81970.82011.03261.03521.0461
SGI 1.04461.0281.01321.00770.96490.93290.85120.81210.83530.8566
DEPI 0.97990.9750.97260.96720.91160.93190.98391.0211.07611.0578
SGAI 0.97190.97850.9830.98560.99581.00341.01781.02291.01241.0089
LVGI 1.21411.16491.05420.95870.9450.96850.84240.7640.71090.6635
TATA -0.0824-0.0777-0.0683-0.0653-0.0792-0.07780.1330.2430.27060.2894
M-score -2.68-2.66-2.43-2.65-2.90-2.91-1.49-1.18-1.56-0.90
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