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GuruFocus has detected 6 Warning Signs with Newell Brands Inc $NWL.
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Newell Brands Inc (NYSE:NWL)
Beneish M-Score
-0.51 (As of Today)

Warning Sign:

Beneish M-Score -0.51 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.

Newell Brands Inc has a M-score of -0.51 signals that the company is a manipulator.

NWL' s Beneish M-Score Range Over the Past 10 Years
Min: -3.51   Max: 5.76
Current: -0.51

-3.51
5.76

During the past 13 years, the highest Beneish M-Score of Newell Brands Inc was 5.76. The lowest was -3.51. And the median was -2.59.


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 Newell Brands 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 * 0.8451+0.528 * 1.1822+0.404 * 2.7561+0.892 * 2.5501+0.115 * 0.8144
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9139+4.679 * -0.0478-0.327 * 0.5264
=-0.51

* 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 $2,560 Mil.
Revenue was 3266.3 + 4135.9 + 3954.6 + 3858.6 = $15,215 Mil.
Gross Profit was 1117.2 + 1522.7 + 1274.8 + 1095.7 = $5,010 Mil.
Total Current Assets was $6,489 Mil.
Total Assets was $33,335 Mil.
Property, Plant and Equipment(Net PPE) was $1,564 Mil.
Depreciation, Depletion and Amortization(DDA) was $565 Mil.
Selling, General & Admin. Expense(SGA) was $3,791 Mil.
Total Current Liabilities was $4,318 Mil.
Long-Term Debt was $10,332 Mil.
Net Income was 638.5 + 165.6 + 186.5 + 135.2 = $1,126 Mil.
Non Operating Income was 756.3 + 3.3 + 0.7 + 159.3 = $920 Mil.
Cash Flow from Operations was -289.2 + 991.5 + 511.4 + 587 = $1,801 Mil.
Accounts Receivable was $1,188 Mil.
Revenue was 1314.9 + 1560.8 + 1530 + 1560.9 = $5,967 Mil.
Gross Profit was 505.6 + 597.2 + 598.9 + 621 = $2,323 Mil.
Total Current Assets was $10,489 Mil.
Total Assets was $15,333 Mil.
Property, Plant and Equipment(Net PPE) was $625 Mil.
Depreciation, Depletion and Amortization(DDA) was $172 Mil.
Selling, General & Admin. Expense(SGA) was $1,627 Mil.
Total Current Liabilities was $2,195 Mil.
Long-Term Debt was $10,607 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)
=(2559.6 / 15215.4) / (1187.7 / 5966.6)
=0.1682243 / 0.19905809
=0.8451

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)
=(2322.7 / 5966.6) / (5010.4 / 15215.4)
=0.38928368 / 0.32929795
=1.1822

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 - (6488.7 + 1563.9) / 33335.3) / (1 - (10488.9 + 624.5) / 15332.8)
=0.75843625 / 0.27518783
=2.7561

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
=15215.4 / 5966.6
=2.5501

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))
=(172.2 / (172.2 + 624.5)) / (565 / (565 + 1563.9))
=0.21614158 / 0.26539527
=0.8144

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)
=(3790.8 / 15215.4) / (1626.5 / 5966.6)
=0.24914232 / 0.27260081
=0.9139

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)
=((10332.1 + 4318.2) / 33335.3) / ((10606.6 + 2194.9) / 15332.8)
=0.43948307 / 0.83490948
=0.5264

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
=(1125.8 - 919.6 - 1800.7) / 33335.3
=-0.0478

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.

Newell Brands Inc has a M-score of -0.51 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.

Newell Brands Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.01370.82291.07011.09031.04021.11080.96911.11370.970.9795
GMI 0.94761.07360.8930.97130.99241.00280.99820.98980.98761.1747
AQI 1.02261.10911.02811.02490.96120.96990.98091.05821.01481.2774
SGI 1.03331.00990.8621.02370.96530.99941.02511.01421.03292.2422
DEPI 1.00540.90810.96860.94661.08351.00230.99411.04230.98041.0085
SGAI 1.02811.03991.06121.03471.01190.98740.98771.07261.01830.8843
LVGI 0.9181.13850.91710.99090.96730.93511.02161.12481.060.7178
TATA -0.0271-0.066-0.0484-0.0123-0.0678-0.0464-0.0185-0.022-0.0044-0.042
M-score -2.56-2.92-2.80-2.45-2.79-2.58-2.59-2.50-2.52-1.27

Newell Brands Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.11371.0531.02610.97430.971.09181.55721.30250.97950.8451
GMI 0.98980.98180.98180.98760.98760.99341.14381.19391.17471.1822
AQI 1.05821.01941.00950.97981.01480.50231.4031.3671.27742.7561
SGI 1.01421.02781.03321.03791.03291.03291.41621.81762.24222.5501
DEPI 1.04231.01640.98771.01710.98041.02442.21451.18581.00850.8144
SGAI 1.07261.07411.07941.04941.01831.00460.96850.93930.88430.9139
LVGI 1.12481.16651.14951.0981.061.33250.75810.75040.71780.5264
TATA -0.022-0.0183-0.0218-0.0204-0.00440.0069-0.0164-0.0199-0.042-0.0478
M-score -2.50-2.56-2.60-2.62-2.52-2.65-1.21-1.20-1.27-0.51
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