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Sears Holdings Corp  (NAS:SHLD) Beneish M-Score: -2.32 (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.

Sears Holdings Corp has a M-score of -2.32 suggests that the company is not a manipulator.

NAS:SHLD' s Beneish M-Score Range Over the Past 10 Years
Min: -3.43   Max: 6.25
Current: -2.32

-3.43
6.25

During the past 13 years, the highest Beneish M-Score of Sears Holdings Corp was 6.25. The lowest was -3.43. And the median was -2.63.


Historical Data

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

* Premium members only.

Sears Holdings Corp Annual Data

Jan08 Jan09 Jan10 Jan11 Jan12 Jan13 Jan14 Jan15 Jan16 Jan17
Beneish M-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -2.76 -2.69 -2.84 -2.01 -2.84

Sears Holdings Corp Quarterly Data

Oct12 Jan13 Apr13 Jul13 Oct13 Jan14 Apr14 Jul14 Oct14 Jan15 Apr15 Jul15 Oct15 Jan16 Apr16 Jul16 Oct16 Jan17 Apr17 Jul17
Beneish M-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only -2.50 -2.94 -2.84 -2.41 -2.32

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.


Calculation

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski 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 Sears Holdings Corp 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 * 1.1583+0.528 * 1.0448+0.404 * 0.916+0.892 * 0.819+0.115 * 0.8543
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0868+4.679 * 0.0636-0.327 * 1.2392
=-2.32

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

This Year (Jul17) TTM:Last Year (Jul16) TTM:
Accounts Receivable was $370 Mil.
Revenue was 4365 + 4301 + 6052 + 5029 = $19,747 Mil.
Gross Profit was 971 + 930 + 1287 + 962 = $4,150 Mil.
Total Current Assets was $4,563 Mil.
Total Assets was $8,351 Mil.
Property, Plant and Equipment(Net PPE) was $1,969 Mil.
Depreciation, Depletion and Amortization(DDA) was $358 Mil.
Selling, General, & Admin. Expense(SGA) was $5,758 Mil.
Total Current Liabilities was $4,960 Mil.
Long-Term Debt & Capital Lease Obligation was $2,635 Mil.
Net Income was -251 + 244 + -607 + -748 = $-1,362 Mil.
Non-Recurring Items was 0 + 0 + -14 + 0 = $-14 Mil.
Cash Flow from Operations was -258 + -880 + 27 + -768 = $-1,879 Mil.
Accounts Receivable was $390 Mil.
Revenue was 5663 + 5394 + 7303 + 5750 = $24,110 Mil.
Gross Profit was 1260 + 1177 + 1595 + 1262 = $5,294 Mil.
Total Current Assets was $5,625 Mil.
Total Assets was $10,614 Mil.
Property, Plant and Equipment(Net PPE) was $2,465 Mil.
(DDA) was $373 Mil.
Selling, General, & Admin. Expense(SGA) was $6,469 Mil.
Total Current Liabilities was $4,953 Mil.
Long-Term Debt & Capital Lease Obligation was $2,837 Mil.




1. DSRI = Days Sales in Receivables Index

Measured as the ratio of Revenue in Accounts Receivable 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)
=(370 / 19747) / (390 / 24110)
=0.01873702 / 0.01617586
=1.1583

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)
=(5294 / 24110) / (4150 / 19747)
=0.21957694 / 0.21015851
=1.0448

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 Property, Plant and Equipment to Total Assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (4563 + 1969) / 8351) / (1 - (5625 + 2465) / 10614)
=0.21781823 / 0.23779913
=0.916

4. SGI = Sales Growth Index

Ratio of Revenue 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
=19747 / 24110
=0.819

5. DEPI = Depreciation Index

Measured as the ratio of the rate of Depreciation, Depletion and Amortization 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))
=(373 / (373 + 2465)) / (358 / (358 + 1969))
=0.13143058 / 0.15384615
=0.8543

6. SGAI = Sales, General and Administrative expenses Index

The ratio of c 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)
=(5758 / 19747) / (6469 / 24110)
=0.2915886 / 0.2683119
=1.0868

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)
=((2635 + 4960) / 8351) / ((2837 + 4953) / 10614)
=0.90947192 / 0.73393631
=1.2392

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
=(-1362 - -14 - -1879) / 8351
=0.0636

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.

Sears Holdings Corp has a M-score of -2.32 suggests that the company will not be a manipulator.


Headlines

From the Internet

Sears Holdings Impacted Bankruptcy Toys R Us

- Seekingalpha 2017-09-21 12:09:41

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