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Beneish M-Score -0.95 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.
During the past 13 years, the highest Beneish M-Score of Safeway Inc was -0.95. The lowest was -4.21. And the median was -2.74.
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 * 1.0003||+||0.528 * 1.0038||+||0.404 * 1.0461||+||0.892 * 1.0616||+||0.115 * 0.9219|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0137||+||4.679 * 0.2894||-||0.327 * 0.6635|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $591 Mil.|
Revenue was 8307.9 + 8307.2 + 8260.9 + 11889 = $36,765 Mil.
Gross Profit was 2174.6 + 2139.5 + 2160.2 + 3128.3 = $9,603 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 $937 Mil.
Selling, General & Admin. Expense(SGA) was $9,036 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 + -54.5 = $-222 Mil.
Cash Flow from Operations was 367.1 + 523.6 + -1986.6 + 934.8 = $-161 Mil.
|Accounts Receivable was $557 Mil.
Revenue was 8099.2 + 8149.8 + 8176.9 + 10204.7 = $34,631 Mil.
Gross Profit was 2094.7 + 2145.8 + 2166.3 + 2672.7 = $9,080 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 $905 Mil.
Selling, General & Admin. Expense(SGA) was $8,396 Mil.
Total Current Liabilities was $5,338 Mil.
Long-Term Debt was $4,228 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(591.4 / 36765)||/||(556.9 / 34630.6)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(2139.5 / 34630.6)||/||(2174.6 / 36765)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|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)|
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.
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))|
|=||(904.7 / (904.7 + 7732.4))||/||(936.9 / (936.9 + 7308.8))|
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)|
|=||(9035.6 / 36765)||/||(8395.6 / 34630.6)|
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)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(3321.9 - -221.7||-||-161.1)||/||12800.8|
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 -0.95 signals that the company is likely to be a manipulator.
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
Safeway Inc Annual Data
Safeway Inc Quarterly Data