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GuruFocus has detected 5 Warning Signs with Cal-Maine Foods Inc $CALM.
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Cal-Maine Foods Inc (NAS:CALM)
Beneish M-Score
0.44 (As of Today)

Warning Sign:

Beneish M-Score 0.44 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.

Cal-Maine Foods Inc has a M-score of 0.44 signals that the company is a manipulator.

CALM' s Beneish M-Score Range Over the Past 10 Years
Min: -3.15   Max: 0.44
Current: 0.44

-3.15
0.44

During the past 13 years, the highest Beneish M-Score of Cal-Maine Foods Inc was 0.44. The lowest was -3.15. And the median was -2.63.


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 Cal-Maine Foods 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 * 2.1226+0.528 * 5.3027+0.404 * 1.6431+0.892 * 0.5491+0.115 * 1.1067
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.7191+4.679 * -0.0486-0.327 * 0.6958
=0.44

* 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 $129 Mil.
Revenue was 306.54 + 253.544 + 239.845 + 303.02 = $1,103 Mil.
Gross Profit was 39.165 + 3.948 + -9.569 + 40.68 = $74 Mil.
Total Current Assets was $485 Mil.
Total Assets was $1,085 Mil.
Property, Plant and Equipment(Net PPE) was $461 Mil.
Depreciation, Depletion and Amortization(DDA) was $47 Mil.
Selling, General & Admin. Expense(SGA) was $163 Mil.
Total Current Liabilities was $93 Mil.
Long-Term Debt was $7 Mil.
Net Income was 4.139 + -23.01 + -30.936 + -0.376 = $-50 Mil.
Non Operating Income was 8.327 + 0.494 + 0.194 + 1.654 = $11 Mil.
Cash Flow from Operations was 12.972 + -24.742 + -45.447 + 49.118 = $-8 Mil.
Accounts Receivable was $111 Mil.
Revenue was 449.76 + 545.975 + 609.895 + 403.011 = $2,009 Mil.
Gross Profit was 132.726 + 211.597 + 263.071 + 109.394 = $717 Mil.
Total Current Assets was $654 Mil.
Total Assets was $1,124 Mil.
Property, Plant and Equipment(Net PPE) was $382 Mil.
Depreciation, Depletion and Amortization(DDA) was $44 Mil.
Selling, General & Admin. Expense(SGA) was $173 Mil.
Total Current Liabilities was $128 Mil.
Long-Term Debt was $21 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)
=(129.098 / 1102.949) / (110.765 / 2008.641)
=0.11704802 / 0.05514425
=2.1226

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)
=(716.788 / 2008.641) / (74.224 / 1102.949)
=0.35685222 / 0.06729595
=5.3027

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 - (484.801 + 461.378) / 1085.275) / (1 - (654.268 + 382.271) / 1124.232)
=0.12816659 / 0.07800258
=1.6431

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
=1102.949 / 2008.641
=0.5491

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))
=(43.692 / (43.692 + 382.271)) / (47.131 / (47.131 + 461.378))
=0.10257229 / 0.09268469
=1.1067

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)
=(162.838 / 1102.949) / (172.5 / 2008.641)
=0.14763874 / 0.08587896
=1.7191

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)
=((7.302 + 92.577) / 1085.275) / ((21.081 + 127.627) / 1124.232)
=0.09203105 / 0.13227519
=0.6958

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
=(-50.183 - 10.669 - -8.099) / 1085.275
=-0.0486

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.

Cal-Maine Foods Inc has a M-score of 0.44 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.

Cal-Maine Foods Inc Annual Data

May07May08May09May10May11May12May13May14May15May16
DSRI 0.96171.00951.22470.90581.16960.93481.09090.5172
GMI 1.47881.03071.08931.0831.08830.79270.83690.7394
AQI 1.11290.59741.01680.89081.02540.72841.03691.2784
SGI 1.01410.97991.0351.18171.15721.11861.09381.211
DEPI 00.88460.99370.99121.06621.07751.03680.9983
SGAI 1.09581.12821.0650.94371.18360.90410.93560.8859
LVGI 1.00270.93590.81360.98560.87650.85470.72340.544
TATA -0.0618-0.0894-0.0245-0.0861-0.0362-0.0409-0.0493-0.0716
M-score -2.63-3.07-2.25-2.79-2.28-2.77-2.51-2.93

Cal-Maine Foods Inc Quarterly Data

Nov14Feb15May15Aug15Nov15Feb16May16Aug16Nov16Feb17
DSRI 1.00650.98241.09091.66510.99960.80080.51720.70041.23482.1226
GMI 0.73690.7710.83690.7260.68090.6850.73941.29442.59145.3027
AQI 0.87311.01621.03691.07721.00291.20821.27841.30381.8021.6431
SGI 1.10481.10711.09381.23731.32861.30031.2110.84120.62420.5491
DEPI 1.11071.03911.03680.98041.00311.0050.99831.05551.12141.1067
SGAI 0.92490.84850.93560.81120.75230.82240.88591.2321.60221.7191
LVGI 0.96990.87090.72341.21161.04350.66490.5440.30940.37580.6958
TATA -0.071-0.0592-0.0493-0.0396-0.0741-0.0392-0.0716-0.0499-0.0132-0.0486
M-score -2.87-2.72-2.51-1.99-2.67-2.52-2.93-2.66-1.380.44
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