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GuruFocus has detected 5 Warning Signs with Schweitzer-Mauduit International Inc $SWM.
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Schweitzer-Mauduit International Inc (NYSE:SWM)
Beneish M-Score
-2.57 (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.

Schweitzer-Mauduit International Inc has a M-score of -2.57 suggests that the company is not a manipulator.

SWM' s Beneish M-Score Range Over the Past 10 Years
Min: -3.26   Max: -2.2
Current: -2.57

-3.26
-2.2

During the past 13 years, the highest Beneish M-Score of Schweitzer-Mauduit International Inc was -2.20. The lowest was -3.26. And the median was -2.70.


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 Schweitzer-Mauduit International 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 * 0.9497+0.528 * 1.002+0.404 * 1.2266+0.892 * 1.0859+0.115 * 0.9276
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.07+4.679 * -0.0344-0.327 * 1.0839
=-2.57

* 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 $141.7 Mil.
Revenue was 233.3 + 198.7 + 209.3 + 217.3 = $858.6 Mil.
Gross Profit was 63.1 + 63.2 + 63.1 + 66.9 = $256.3 Mil.
Total Current Assets was $403.5 Mil.
Total Assets was $1,487.5 Mil.
Property, Plant and Equipment(Net PPE) was $342.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $50.3 Mil.
Selling, General & Admin. Expense(SGA) was $112.7 Mil.
Total Current Liabilities was $143.9 Mil.
Long-Term Debt was $723.2 Mil.
Net Income was 13.7 + 17 + 18.7 + 26 = $75.4 Mil.
Non Operating Income was -0.1 + -0.1 + 0.7 + 1 = $1.5 Mil.
Cash Flow from Operations was 13 + 46.7 + 30.8 + 34.6 = $125.1 Mil.
Accounts Receivable was $137.4 Mil.
Revenue was 214.6 + 209.8 + 184.4 + 181.9 = $790.7 Mil.
Gross Profit was 63.5 + 65.8 + 52.4 + 54.8 = $236.5 Mil.
Total Current Assets was $477.1 Mil.
Total Assets was $1,330.0 Mil.
Property, Plant and Equipment(Net PPE) was $312.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $42.1 Mil.
Selling, General & Admin. Expense(SGA) was $97.0 Mil.
Total Current Liabilities was $136.5 Mil.
Long-Term Debt was $578.8 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)
=(141.7 / 858.6) / (137.4 / 790.7)
=0.16503611 / 0.17377008
=0.9497

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)
=(236.5 / 790.7) / (256.3 / 858.6)
=0.29910206 / 0.2985092
=1.002

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 - (403.5 + 342.9) / 1487.5) / (1 - (477.1 + 312.7) / 1330)
=0.49821849 / 0.40616541
=1.2266

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
=858.6 / 790.7
=1.0859

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))
=(42.1 / (42.1 + 312.7)) / (50.3 / (50.3 + 342.9))
=0.1186584 / 0.12792472
=0.9276

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)
=(112.7 / 858.6) / (97 / 790.7)
=0.13126019 / 0.12267611
=1.07

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)
=((723.2 + 143.9) / 1487.5) / ((578.8 + 136.5) / 1330)
=0.58292437 / 0.53781955
=1.0839

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
=(75.4 - 1.5 - 125.1) / 1487.5
=-0.0344

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.

Schweitzer-Mauduit International Inc has a M-score of -2.57 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.

Schweitzer-Mauduit International Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.03730.8050.75061.13181.11770.83591.11670.87141.46130.9144
GMI 0.84371.12530.53220.9410.87070.92481.01941.18710.9380.9609
AQI 1.46121.37020.90630.98950.92921.10142.07461.06011.62511.0273
SGI 1.0911.07430.96020.98641.08390.98760.99271.02780.9621.0992
DEPI 1.21630.65171.05551.19680.9221.02151.01010.78210.94330.9287
SGAI 1.05850.89411.27630.95161.13070.9830.93761.14651.14981.0539
LVGI 1.09631.20240.61430.93731.23380.94271.3681.09731.16870.8857
TATA -0.0875-0.0401-0.0337-0.08950.0162-0.1083-0.0878-0.0722-0.0521-0.0433
M-score -2.69-2.65-3.10-2.77-2.43-3.12-2.45-2.87-2.20-2.66

Schweitzer-Mauduit International Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.87140.91090.8981.0011.46131.1771.08570.99480.91440.9497
GMI 1.18711.15661.11161.01430.9380.91410.91530.92620.96091.002
AQI 1.06011.12431.14471.0931.62511.52331.57741.67561.02731.2266
SGI 1.02780.99310.95670.90970.9621.01681.09291.15631.09921.0859
DEPI 0.78210.84960.86820.98020.94330.95840.91680.86930.92870.9276
SGAI 1.14651.13031.13811.0781.14981.11961.05791.17961.05391.07
LVGI 1.09731.06521.00480.99141.16871.08151.08571.02350.88571.0839
TATA -0.0722-0.0742-0.0847-0.0717-0.0521-0.0538-0.0433-0.0554-0.0433-0.0344
M-score -2.87-2.84-2.93-2.86-2.20-2.44-2.38-2.42-2.66-2.57
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