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GuruFocus has detected 2 Warning Signs with Oil-Dri Corp of America $ODC.
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Oil-Dri Corp of America (NYSE:ODC)
Beneish M-Score
-2.58 (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.

Oil-Dri Corp of America has a M-score of -2.58 suggests that the company is not a manipulator.

ODC' s Beneish M-Score Range Over the Past 10 Years
Min: -3.34   Max: -1.94
Current: -2.58

-3.34
-1.94

During the past 13 years, the highest Beneish M-Score of Oil-Dri Corp of America was -1.94. The lowest was -3.34. 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 Oil-Dri Corp of America 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 * 1.0554+0.528 * 0.9068+0.404 * 1.1576+0.892 * 0.9889+0.115 * 0.9735
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.3437+4.679 * -0.0308-0.327 * 0.8371
=-2.58

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

This Year (Jan17) TTM:Last Year (Jan16) TTM:
Accounts Receivable was $32.0 Mil.
Revenue was 65.174 + 66.612 + 64.916 + 64.235 = $260.9 Mil.
Gross Profit was 19.125 + 20.725 + 18.866 + 18.568 = $77.3 Mil.
Total Current Assets was $92.8 Mil.
Total Assets was $206.6 Mil.
Property, Plant and Equipment(Net PPE) was $81.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.7 Mil.
Selling, General & Admin. Expense(SGA) was $66.4 Mil.
Total Current Liabilities was $29.5 Mil.
Long-Term Debt was $9.1 Mil.
Net Income was 4.25 + 2.009 + 5.261 + -0.892 = $10.6 Mil.
Non Operating Income was -0.113 + -0.124 + -0.235 + 0.25 = $-0.2 Mil.
Cash Flow from Operations was 7.768 + 1.325 + 5.762 + 2.358 = $17.2 Mil.
Accounts Receivable was $30.7 Mil.
Revenue was 65.367 + 67.795 + 65.519 + 65.196 = $263.9 Mil.
Gross Profit was 19.062 + 20.653 + 16.722 + 14.433 = $70.9 Mil.
Total Current Assets was $92.7 Mil.
Total Assets was $199.1 Mil.
Property, Plant and Equipment(Net PPE) was $79.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.0 Mil.
Selling, General & Admin. Expense(SGA) was $50.0 Mil.
Total Current Liabilities was $32.2 Mil.
Long-Term Debt was $12.3 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)
=(32.047 / 260.937) / (30.708 / 263.877)
=0.12281509 / 0.1163724
=1.0554

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)
=(70.87 / 263.877) / (77.284 / 260.937)
=0.2685721 / 0.29617877
=0.9068

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 - (92.778 + 81.498) / 206.574) / (1 - (92.72 + 79.449) / 199.055)
=0.15635075 / 0.1350682
=1.1576

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
=260.937 / 263.877
=0.9889

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))
=(11.972 / (11.972 + 79.449)) / (12.667 / (12.667 + 81.498))
=0.13095459 / 0.1345192
=0.9735

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)
=(66.414 / 260.937) / (49.982 / 263.877)
=0.25452121 / 0.18941401
=1.3437

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)
=((9.147 + 29.498) / 206.574) / ((12.333 + 32.154) / 199.055)
=0.18707582 / 0.22349099
=0.8371

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
=(10.628 - -0.222 - 17.213) / 206.574
=-0.0308

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.

Oil-Dri Corp of America has a M-score of -2.58 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.

Oil-Dri Corp of America Annual Data

Jul07Jul08Jul09Jul10Jul11Jul12Jul13Jul14Jul15Jul16
DSRI 1.03481.02560.90891.01071.03850.97460.98980.93641.03420.9623
GMI 0.86121.08660.94850.92151.02790.90010.92381.18480.97330.7825
AQI 0.96571.15111.0760.9230.78691.0730.91821.93870.97781.105
SGI 1.03371.09541.01670.92721.03521.06141.04111.06280.98161.0035
DEPI 1.00170.90061.14331.04950.95250.88071.05440.97860.93140.9972
SGAI 1.1440.86561.02671.120.97121.22670.96570.93450.97071.367
LVGI 0.91830.90320.81380.98141.17140.97450.92910.88610.8970.9015
TATA -0.0709-0.0192-0.0435-0.112-0.0258-0.1007-0.0498-0.0451-0.0839-0.0562
M-score -2.83-2.31-2.68-3.14-2.66-2.99-2.72-2.17-2.85-2.88

Oil-Dri Corp of America Quarterly Data

Oct14Jan15Apr15Jul15Oct15Jan16Apr16Jul16Oct16Jan17
DSRI 0.94490.86050.98121.03421.02140.9530.90890.96230.97871.0554
GMI 1.22911.21651.12620.97330.83110.77890.74690.78250.86150.9068
AQI 1.89641.0771.05480.97780.90790.90250.9571.1051.14431.1576
SGI 1.06371.01250.99160.98160.9790.9991.00381.00350.99230.9889
DEPI 0.94380.94720.94680.93140.93840.96080.96810.99721.00290.9735
SGAI 0.87830.95120.94960.97071.0571.10021.26471.3671.41851.3437
LVGI 0.88360.8960.90270.8970.93440.95490.92040.90150.85240.8371
TATA -0.0647-0.1015-0.0835-0.0839-0.1007-0.0904-0.0862-0.0562-0.0379-0.0308
M-score -2.24-2.89-2.77-2.85-3.07-3.11-3.14-2.88-2.72-2.58
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