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W W Grainger Inc (NYSE:GWW)
Beneish M-Score
-2.62 (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 -2.62 suggests that the company is not a manipulator.

GWW' s 10-Year Beneish M-Score Range
Min: -3.28   Max: -1.89
Current: -2.62

-3.28
-1.89

During the past 13 years, the highest Beneish M-Score of W W Grainger Inc was -1.89. The lowest was -3.28. And the median was -2.54.


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 * 0.9842+0.528 * 1.0132+0.404 * 0.9356+0.892 * 1.0499+0.115 * 0.9491
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9907+4.679 * -0.028-0.327 * 1.0448
=-2.62

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
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.
Net Income was 211.015 + 148.839 + 230.322 + 205.915 = $796 Mil.
Non Operating Income was -2.164 + -3.089 + -1.131 + 0.018 = $-6 Mil.
Cash Flow from Operations was 156.209 + 296.981 + 334.367 + 160.948 = $949 Mil.
Accounts Receivable was $1,160 Mil.
Revenue was 2385.627 + 2377.232 + 2398.53 + 2381.561 = $9,543 Mil.
Gross Profit was 1075.971 + 1006.397 + 1051.366 + 1046.984 = $4,181 Mil.
Total Current Assets was $2,996 Mil.
Total Assets was $5,234 Mil.
Property, Plant and Equipment(Net PPE) was $1,211 Mil.
Depreciation, Depletion and Amortization(DDA) was $187 Mil.
Selling, General & Admin. Expense(SGA) was $2,873 Mil.
Total Current Liabilities was $1,166 Mil.
Long-Term Debt was $438 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)
=(1198.153 / 10018.987) / (1159.556 / 9542.95)
=0.11958824 / 0.12150918
=0.9842

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)
=(1054.801 / 9542.95) / (1093.743 / 10018.987)
=0.43809493 / 0.43238044
=1.0132

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 - (2946.641 + 1306.962) / 5210.972) / (1 - (2995.664 + 1210.778) / 5234.229)
=0.18372177 / 0.19635881
=0.9356

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
=10018.987 / 9542.95
=1.0499

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))
=(187.444 / (187.444 + 1210.778)) / (214.961 / (214.961 + 1306.962))
=0.13405883 / 0.14124302
=0.9491

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)
=(2987.989 / 10018.987) / (2872.829 / 9542.95)
=0.29823265 / 0.30104203
=0.9907

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)
=((371.07 + 1297.545) / 5210.972) / ((438.068 + 1166.137) / 5234.229)
=0.32021185 / 0.30648353
=1.0448

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
=(796.091 - -6.366 - 948.505) / 5210.972
=-0.028

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 -2.62 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.98541.02620.97510.91641.16721.05761.03570.95471.11141.0084
GMI 0.96540.97750.98630.98960.98160.9980.96290.99320.99831.0124
AQI 1.08421.13431.04440.93561.37241.04531.13220.94880.99550.9758
SGI 1.09441.06461.09081.06730.90831.15431.12481.10791.05451.0559
DEPI 0.92380.9510.99571.00150.97340.99691.08981.01110.93840.9565
SGAI 1.0241.01570.99770.98181.05080.96131.01891.02250.96690.9896
LVGI 0.95561.03631.15071.32340.91651.01371.00330.93091.01021.0118
TATA -0.0286-0.0193-0.0164-0.0156-0.0943-0.022-0.0199-0.0252-0.0361-0.029
M-score -2.53-2.47-2.54-2.70-2.69-2.37-2.39-2.55-2.51-2.57

W W Grainger Inc Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 0.95470.97990.99771.00321.11141.06411.03841.0781.00840.9842
GMI 0.99320.99110.99080.99160.99831.00371.01121.01741.01241.0132
AQI 0.94880.93170.91210.99620.99551.02881.02930.94650.97580.9356
SGI 1.10791.07741.0621.05521.05451.0561.05431.05861.05591.0499
DEPI 1.01111.00440.97990.96630.93840.92940.9650.94960.95650.9491
SGAI 1.02251.01591.0160.96240.96690.97040.97520.98760.98960.9907
LVGI 0.93090.9620.94850.92451.01021.06421.02580.99851.01181.0448
TATA -0.0252-0.0344-0.0447-0.0352-0.0361-0.0335-0.0259-0.0183-0.029-0.028
M-score -2.55-2.61-2.66-2.57-2.51-2.54-2.51-2.46-2.57-2.62
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