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W.W. Grainger Inc (NYSE:GWW)
Beneish M-Score
-2.67 (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.

W.W. Grainger Inc has a M-score of -2.67 suggests that the company is not a manipulator.

GWW' s Beneish M-Score Range Over the Past 10 Years
Min: -3.28   Max: -1.9
Current: -2.67

-3.28
-1.9

During the past 13 years, the highest Beneish M-Score of W.W. Grainger Inc was -1.90. The lowest was -3.28. And the median was -2.55.


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 W.W. Grainger 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 * 1.0865+0.528 * 1.0379+0.404 * 1.2626+0.892 * 1.0021+0.115 * 1.0198
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.974+4.679 * -0.0372-0.327 * 1.7108
=-2.67

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $1,305 Mil.
Revenue was 2506.538 + 2478.258 + 2532.9 + 2522.565 = $10,040 Mil.
Gross Profit was 1045.053 + 1002.375 + 1061.879 + 1073.432 = $4,183 Mil.
Total Current Assets was $3,139 Mil.
Total Assets was $5,965 Mil.
Property, Plant and Equipment(Net PPE) was $1,442 Mil.
Depreciation, Depletion and Amortization(DDA) was $232 Mil.
Selling, General & Admin. Expense(SGA) was $2,917 Mil.
Total Current Liabilities was $1,880 Mil.
Long-Term Debt was $1,387 Mil.
Net Income was 186.713 + 145.232 + 192.201 + 220.548 = $745 Mil.
Non Operating Income was -5.948 + -3.073 + -7.847 + -4.124 = $-21 Mil.
Cash Flow from Operations was 153.731 + 253.974 + 366.425 + 213.296 = $987 Mil.
Accounts Receivable was $1,198 Mil.
Revenue was 2439.661 + 2510.959 + 2562.263 + 2506.104 = $10,019 Mil.
Gross Profit was 1093.743 + 1054.801 + 1102.784 + 1080.686 = $4,332 Mil.
Total Current Assets was $2,947 Mil.
Total Assets was $5,211 Mil.
Property, Plant and Equipment(Net PPE) was $1,307 Mil.
Depreciation, Depletion and Amortization(DDA) was $215 Mil.
Selling, General & Admin. Expense(SGA) was $2,988 Mil.
Total Current Liabilities was $1,298 Mil.
Long-Term Debt was $371 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)
=(1304.56 / 10040.261) / (1198.153 / 10018.987)
=0.12993288 / 0.11958824
=1.0865

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)
=(1002.375 / 10018.987) / (1045.053 / 10040.261)
=0.43238044 / 0.41659664
=1.0379

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 - (3138.961 + 1442.191) / 5964.839) / (1 - (2946.641 + 1306.962) / 5210.972)
=0.23197391 / 0.18372177
=1.2626

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
=10040.261 / 10018.987
=1.0021

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))
=(214.961 / (214.961 + 1306.962)) / (231.85 / (231.85 + 1442.191))
=0.14124302 / 0.13849721
=1.0198

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)
=(2916.575 / 10040.261) / (2987.989 / 10018.987)
=0.29048797 / 0.29823265
=0.974

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)
=((1387.124 + 1880.44) / 5964.839) / ((371.07 + 1297.545) / 5210.972)
=0.54780422 / 0.32021185
=1.7108

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
=(744.694 - -20.992 - 987.426) / 5964.839
=-0.0372

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.

W.W. Grainger Inc has a M-score of -2.67 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 own currency.

W.W. Grainger Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.02620.97510.91641.16721.05761.03570.95471.11141.00841.0304
GMI 0.97750.98630.98960.98160.9980.96290.99320.99831.01241.0204
AQI 1.13431.04440.93561.37241.04531.13220.94880.99550.97491.2538
SGI 1.06461.09081.06730.90831.15431.12481.10791.05451.05591.0008
DEPI 0.9510.99571.00150.97340.99691.08981.01110.93840.95650.9893
SGAI 1.01570.99770.98181.05080.96131.01891.02250.96690.98960.987
LVGI 1.03631.15071.32340.91651.01371.00330.93091.01021.01131.7208
TATA -0.0193-0.0164-0.0156-0.0943-0.022-0.0199-0.0252-0.0361-0.029-0.0348
M-score -2.47-2.54-2.70-2.69-2.37-2.39-2.55-2.51-2.57-2.74

W.W. Grainger Inc Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.11141.06411.03841.0781.00840.98420.981.02751.03041.0865
GMI 0.99831.00371.01121.01741.01241.01321.01161.01351.02041.0379
AQI 0.99551.02881.02930.94650.97490.93560.86461.19141.25381.2626
SGI 1.05451.0561.05431.05861.05591.04991.03811.01781.00081.0021
DEPI 0.93840.92940.9650.94960.95650.94910.93680.98350.98931.0198
SGAI 0.96690.97040.97520.98760.98960.99070.97950.9960.9870.974
LVGI 1.01021.06421.02580.99851.01131.04481.40081.78441.72081.7108
TATA -0.0361-0.0335-0.0259-0.0183-0.029-0.028-0.0308-0.0419-0.0348-0.0372
M-score -2.51-2.54-2.51-2.46-2.57-2.62-2.79-2.81-2.74-2.67
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