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GuruFocus has detected 4 Warning Signs with Ball Corp $BLL.
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Ball Corp (NYSE:BLL)
Beneish M-Score
-1.94 (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.

Ball Corp has a M-score of -1.94 signals that the company is a manipulator.

BLL' s Beneish M-Score Range Over the Past 10 Years
Min: -3.57   Max: -1.37
Current: -1.94

-3.57
-1.37

During the past 13 years, the highest Beneish M-Score of Ball Corp was -1.37. The lowest was -3.57. And the median was -2.71.


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 Ball 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 * 1.3553+0.528 * 0.9857+0.404 * 1.0102+0.892 * 1.1332+0.115 * 1.0282
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0018+4.679 * 0.0111-0.327 * 0.8661
=-1.94

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

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was USD 1,158 Mil.
Revenue was 2461 + 2815 + 2030 + 1756 = USD 9,062 Mil.
Gross Profit was 516 + 477 + 434 + 340 = USD 1,767 Mil.
Total Current Assets was USD 3,653 Mil.
Total Assets was USD 16,173 Mil.
Property, Plant and Equipment(Net PPE) was USD 4,387 Mil.
Depreciation, Depletion and Amortization(DDA) was USD 453 Mil.
Selling, General & Admin. Expense(SGA) was USD 512 Mil.
Total Current Liabilities was USD 2,969 Mil.
Long-Term Debt was USD 7,310 Mil.
Net Income was 53 + 0 + 338 + -127 = USD 264 Mil.
Non Operating Income was -1 + -2 + -46 + -61 = USD -110 Mil.
Cash Flow from Operations was 627 + -469 + 422 + -386 = USD 194 Mil.
Accounts Receivable was USD 754 Mil.
Revenue was 1805 + 2097 + 2172 + 1923 = USD 7,997 Mil.
Gross Profit was 371 + 407 + 397 + 362 = USD 1,537 Mil.
Total Current Assets was USD 2,184 Mil.
Total Assets was USD 9,697 Mil.
Property, Plant and Equipment(Net PPE) was USD 2,686 Mil.
Depreciation, Depletion and Amortization(DDA) was USD 286 Mil.
Selling, General & Admin. Expense(SGA) was USD 451 Mil.
Total Current Liabilities was USD 2,142 Mil.
Long-Term Debt was USD 4,974 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)
=(1158 / 9062) / (754 / 7997)
=0.12778636 / 0.09428536
=1.3553

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)
=(1537 / 7997) / (1767 / 9062)
=0.19219707 / 0.19499007
=0.9857

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 - (3653 + 4387) / 16173) / (1 - (2184 + 2686) / 9697)
=0.50287516 / 0.49778282
=1.0102

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
=9062 / 7997
=1.1332

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))
=(286 / (286 + 2686)) / (453 / (453 + 4387))
=0.09623149 / 0.09359504
=1.0282

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)
=(512 / 9062) / (451 / 7997)
=0.05649967 / 0.05639615
=1.0018

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)
=((7310 + 2969) / 16173) / ((4974 + 2142) / 9697)
=0.63556545 / 0.73383521
=0.8661

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
=(264 - -110 - 194) / 16173
=0.0111

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.

Ball Corp has a M-score of -1.94 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.

Ball Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.9010.73071.38341.39710.87461.01620.95320.98081.01891.3555
GMI 1.03720.97470.90870.98551.00431.00440.95050.96691.01210.9867
AQI 0.98460.98761.03960.97411.01331.02290.98860.98081.33321.0102
SGI 1.1161.02320.88741.1371.13121.01210.96941.0120.93311.133
DEPI 0.93850.92021.12741.06210.96091.08050.98481.0831.07681.0282
SGAI 1.00990.87011.20821.01550.9450.99861.12021.11.03491.0042
LVGI 0.96241.01560.91841.03011.05991.01691.02811.01081.1110.8661
TATA -0.0651-0.0484-0.0265-0.0055-0.0692-0.0589-0.0517-0.0672-0.06280.011
M-score -2.76-2.94-2.38-2.04-2.81-2.71-2.85-2.84-2.71-1.94

Ball Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.9190.98080.98671.09731.09311.01891.0921.55181.46661.3553
GMI 0.92610.96691.00271.0341.03751.01210.99580.93940.98430.9857
AQI 0.99210.98080.93940.9550.96211.33321.37681.15831.3791.0102
SGI 0.9941.0121.00030.97580.96370.93310.92270.91891.02211.1332
DEPI 1.03631.0831.0761.06941.07541.07681.06921.59421.29141.0282
SGAI 1.09731.11.13711.15821.07281.03721.01230.9730.96411.0018
LVGI 1.02121.01081.01341.00351.01061.1111.12081.12490.93650.8661
TATA -0.0654-0.0672-0.0665-0.0692-0.0739-0.0628-0.0548-0.01440.02510.0111
M-score -2.93-2.84-2.85-2.76-2.78-2.71-2.60-2.05-1.71-1.94
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