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GuruFocus has detected 3 Warning Signs with Clorox Co $CLX.
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Clorox Co (NYSE:CLX)
Beneish M-Score
-2.52 (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.

Clorox Co has a M-score of -2.52 suggests that the company is not a manipulator.

CLX' s Beneish M-Score Range Over the Past 10 Years
Min: -3.7   Max: -2.15
Current: -2.52

-3.7
-2.15

During the past 13 years, the highest Beneish M-Score of Clorox Co was -2.15. The lowest was -3.70. And the median was -2.67.


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 Clorox Co 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 * 1.0341+0.528 * 1.0109+0.404 * 1.0873+0.892 * 1.0364+0.115 * 1.0204
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.025+4.679 * -0.0315-0.327 * 0.9851
=-2.52

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

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $568 Mil.
Revenue was 1477 + 1406 + 1443 + 1600 = $5,926 Mil.
Gross Profit was 650 + 629 + 640 + 727 = $2,646 Mil.
Total Current Assets was $1,603 Mil.
Total Assets was $4,629 Mil.
Property, Plant and Equipment(Net PPE) was $903 Mil.
Depreciation, Depletion and Amortization(DDA) was $164 Mil.
Selling, General & Admin. Expense(SGA) was $1,432 Mil.
Total Current Liabilities was $1,998 Mil.
Long-Term Debt was $1,390 Mil.
Net Income was 172 + 149 + 179 + 165 = $665 Mil.
Non Operating Income was 16 + -23 + 5 + 0 = $-2 Mil.
Cash Flow from Operations was 212 + 100 + 170 + 331 = $813 Mil.
Accounts Receivable was $530 Mil.
Revenue was 1426 + 1345 + 1390 + 1557 = $5,718 Mil.
Gross Profit was 646 + 600 + 625 + 710 = $2,581 Mil.
Total Current Assets was $1,590 Mil.
Total Assets was $4,284 Mil.
Property, Plant and Equipment(Net PPE) was $887 Mil.
Depreciation, Depletion and Amortization(DDA) was $165 Mil.
Selling, General & Admin. Expense(SGA) was $1,348 Mil.
Total Current Liabilities was $1,387 Mil.
Long-Term Debt was $1,796 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)
=(568 / 5926) / (530 / 5718)
=0.0958488 / 0.09268975
=1.0341

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)
=(2581 / 5718) / (2646 / 5926)
=0.4513816 / 0.44650692
=1.0109

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 - (1603 + 903) / 4629) / (1 - (1590 + 887) / 4284)
=0.45863037 / 0.42180205
=1.0873

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
=5926 / 5718
=1.0364

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))
=(165 / (165 + 887)) / (164 / (164 + 903))
=0.15684411 / 0.15370197
=1.0204

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)
=(1432 / 5926) / (1348 / 5718)
=0.24164698 / 0.23574676
=1.025

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)
=((1390 + 1998) / 4629) / ((1796 + 1387) / 4284)
=0.73190754 / 0.7429972
=0.9851

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
=(665 - -2 - 813) / 4629
=-0.0315

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.

Clorox Co has a M-score of -2.52 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.

Clorox Co Annual Data

Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15Jun16
DSRI 1.01321.00910.93111.1570.97281.04960.99510.94460.92681.0762
GMI 0.97781.04590.95820.97151.01971.03120.97511.01140.98020.9666
AQI 0.98961.20741.00580.86270.9630.98340.99531.02110.98521.0789
SGI 1.04371.08791.03360.96040.99941.04531.01190.99661.02561.0187
DEPI 0.95950.93421.06981.03271.11581.00960.94330.97720.98651.0092
SGAI 0.98910.96860.99881.05331.00790.98990.99670.97471.02721.0351
LVGI 0.94231.15350.960.92761.01160.99480.9190.99071.01250.966
TATA -0.0586-0.0565-0.0382-0.042-0.0408-0.0207-0.0494-0.0507-0.0728-0.0292
M-score -2.70-2.60-2.69-2.62-2.69-2.48-2.70-2.75-2.89-2.51

Clorox Co Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.94120.93750.92681.00640.97870.98221.07621.02481.05081.0341
GMI 1.01811.01190.98020.96430.95420.94910.96660.98180.99211.0109
AQI 0.90910.99720.98520.9851.10180.9821.07891.08661.06981.0873
SGI 1.00711.02211.02561.03081.02391.0221.01871.02131.0321.0364
DEPI 0.96790.96770.98650.9920.98851.0071.00921.0411.03021.0204
SGAI 0.95820.99161.02721.03891.04511.03611.03511.04031.03621.025
LVGI 0.99150.9331.01251.01930.99771.01470.9660.96470.99310.9851
TATA -0.0676-0.0653-0.0728-0.0315-0.0263-0.038-0.0292-0.034-0.0412-0.0315
M-score -2.86-2.80-2.89-2.63-2.59-2.70-2.51-2.56-2.57-2.52
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