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GuruFocus has detected 4 Warning Signs with Genuine Parts Co $GPC.
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Genuine Parts Co (NYSE:GPC)
Beneish M-Score
-2.56 (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.

Genuine Parts Co has a M-score of -2.56 suggests that the company is not a manipulator.

GPC' s Beneish M-Score Range Over the Past 10 Years
Min: -2.99   Max: -2.15
Current: -2.56

-2.99
-2.15

During the past 13 years, the highest Beneish M-Score of Genuine Parts Co was -2.15. The lowest was -2.99. And the median was -2.48.


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 Genuine Parts Co 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 * 1.0596+0.528 * 0.9944+0.404 * 1.0338+0.892 * 1.0039+0.115 * 1.0648
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0245+4.679 * -0.0297-0.327 * 1.0517
=-2.56

* 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 $1,939 Mil.
Revenue was 3780.065 + 3941.743 + 3899.638 + 3718.267 = $15,340 Mil.
Gross Profit was 1131.083 + 1198.601 + 1165.452 + 1104.471 = $4,600 Mil.
Total Current Assets was $5,948 Mil.
Total Assets was $8,859 Mil.
Property, Plant and Equipment(Net PPE) was $728 Mil.
Depreciation, Depletion and Amortization(DDA) was $147 Mil.
Selling, General & Admin. Expense(SGA) was $3,371 Mil.
Total Current Liabilities was $4,244 Mil.
Long-Term Debt was $550 Mil.
Net Income was 152.52 + 185.326 + 191.369 + 158.025 = $687 Mil.
Non Operating Income was 4.568 + 0 + 0 + 0 = $5 Mil.
Cash Flow from Operations was 204.726 + 210.86 + 395.447 + 135.045 = $946 Mil.
Accounts Receivable was $1,822 Mil.
Revenue was 3681.79 + 3921.802 + 3940.401 + 3736.051 = $15,280 Mil.
Gross Profit was 1095.478 + 1169.225 + 1178.33 + 1112.819 = $4,556 Mil.
Total Current Assets was $5,555 Mil.
Total Assets was $8,145 Mil.
Property, Plant and Equipment(Net PPE) was $648 Mil.
Depreciation, Depletion and Amortization(DDA) was $142 Mil.
Selling, General & Admin. Expense(SGA) was $3,277 Mil.
Total Current Liabilities was $3,941 Mil.
Long-Term Debt was $250 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)
=(1938.562 / 15339.713) / (1822.419 / 15280.044)
=0.12637538 / 0.11926792
=1.0596

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)
=(4555.852 / 15280.044) / (4599.607 / 15339.713)
=0.29815699 / 0.29984961
=0.9944

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 - (5948.431 + 728.124) / 8859.4) / (1 - (5555.316 + 648.217) / 8144.771)
=0.24638745 / 0.23834163
=1.0338

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
=15339.713 / 15280.044
=1.0039

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))
=(141.675 / (141.675 + 648.217)) / (147.487 / (147.487 + 728.124))
=0.17935996 / 0.16843895
=1.0648

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)
=(3370.833 / 15339.713) / (3277.389 / 15280.044)
=0.21974551 / 0.21448819
=1.0245

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)
=((550 + 4244.15) / 8859.4) / ((250 + 3940.654) / 8144.771)
=0.5411371 / 0.51452079
=1.0517

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
=(687.24 - 4.568 - 946.078) / 8859.4
=-0.0297

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.

Genuine Parts Co has a M-score of -2.56 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.

Genuine Parts Co Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.95540.99111.06171.03140.96330.97641.03291.0320.97721.0596
GMI 1.05560.99870.99281.0311.00280.9970.96851.00111.00430.9944
AQI 1.1951.6620.9471.06471.47541.36571.1161.03280.99081.0338
SGI 1.03681.01590.91311.11441.11161.04451.08181.08980.9961.0039
DEPI 0.85550.98541.10271.00861.03191.020.88830.91941.01041.0648
SGAI 0.91891.01371.03030.95670.98610.98031.05371.00430.99291.0245
LVGI 0.99740.98391.02121.06620.99640.99291.19241.03281.03891.0517
TATA -0.0304-0.0115-0.0893-0.0378-0.011-0.0415-0.0513-0.0118-0.0583-0.0321
M-score -2.52-2.26-2.94-2.50-2.26-2.50-2.67-2.43-2.79-2.57

Genuine Parts Co Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.02161.0321.01561.00110.96880.97721.01421.02881.04751.0596
GMI 0.9781.00111.01031.01341.01051.00431.00381.00170.99770.9944
AQI 0.99711.03280.96220.94850.94760.99081.0121.00991.03411.0338
SGI 1.09931.08981.06541.05081.02550.9960.98770.9830.98841.0039
DEPI 0.89080.91940.96340.96650.9531.01041.04271.09051.0861.0648
SGAI 1.05091.00430.99140.98090.98320.99290.9940.99771.00771.0245
LVGI 1.06331.03281.05211.0691.04841.03891.02131.03881.03381.0517
TATA -0.0129-0.0088-0.016-0.0188-0.0464-0.0556-0.0554-0.0621-0.0352-0.0297
M-score -2.49-2.42-2.51-2.56-2.74-2.78-2.73-2.76-2.60-2.56
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