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W.W. Grainger Inc (NYSE:GWW)
Beneish M-Score
-2.64 (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 -2.64 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: -2.64

-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 * 1.0131+0.528 * 1.0523+0.404 * 0.9792+0.892 * 1.0139+0.115 * 0.9789
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9736+4.679 * -0.0352-0.327 * 1.1217
=-2.64

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

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $1,326 Mil.
Revenue was 2596.288 + 2563.668 + 2506.538 + 2478.258 = $10,145 Mil.
Gross Profit was 1039.752 + 1040.059 + 1045.053 + 1002.375 = $4,127 Mil.
Total Current Assets was $3,129 Mil.
Total Assets was $5,886 Mil.
Property, Plant and Equipment(Net PPE) was $1,437 Mil.
Depreciation, Depletion and Amortization(DDA) was $241 Mil.
Selling, General & Admin. Expense(SGA) was $2,930 Mil.
Total Current Liabilities was $1,536 Mil.
Long-Term Debt was $1,874 Mil.
Net Income was 185.873 + 172.676 + 186.713 + 145.232 = $690 Mil.
Non Operating Income was -11.525 + -5.965 + -5.948 + -3.073 = $-27 Mil.
Cash Flow from Operations was 343.994 + 172.658 + 153.731 + 253.974 = $924 Mil.
Accounts Receivable was $1,291 Mil.
Revenue was 2532.9 + 2522.565 + 2439.661 + 2510.959 = $10,006 Mil.
Gross Profit was 1061.879 + 1073.432 + 1093.743 + 1054.801 = $4,284 Mil.
Total Current Assets was $3,105 Mil.
Total Assets was $5,807 Mil.
Property, Plant and Equipment(Net PPE) was $1,373 Mil.
Depreciation, Depletion and Amortization(DDA) was $225 Mil.
Selling, General & Admin. Expense(SGA) was $2,969 Mil.
Total Current Liabilities was $1,549 Mil.
Long-Term Debt was $1,451 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)
=(1326.359 / 10144.752) / (1291.365 / 10006.085)
=0.13074336 / 0.12905797
=1.0131

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)
=(4283.855 / 10006.085) / (4127.239 / 10144.752)
=0.42812499 / 0.40683488
=1.0523

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 - (3129.192 + 1436.938) / 5885.509) / (1 - (3104.686 + 1372.992) / 5807.153)
=0.22417415 / 0.22893748
=0.9792

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
=10144.752 / 10006.085
=1.0139

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))
=(224.775 / (224.775 + 1372.992)) / (241.162 / (241.162 + 1436.938))
=0.14068071 / 0.14371134
=0.9789

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)
=(2930.345 / 10144.752) / (2968.648 / 10006.085)
=0.28885329 / 0.29668427
=0.9736

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)
=((1874.132 + 1536.311) / 5885.509) / ((1450.624 + 1549.197) / 5807.153)
=0.57946441 / 0.51657344
=1.1217

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
=(690.494 - -26.511 - 924.357) / 5885.509
=-0.0352

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 -2.64 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.

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

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 1.03841.0781.00840.98420.981.02751.03041.08651.0891.0131
GMI 1.01121.01741.01241.01321.01161.01351.02041.03791.0471.0523
AQI 1.02930.94650.97490.93560.86461.19141.25381.26261.35340.9792
SGI 1.05431.05861.05591.04991.03811.01781.00081.00211.00461.0139
DEPI 0.9650.94960.95650.94910.93680.98350.98931.01981.00980.9789
SGAI 0.97520.98760.98960.99070.97950.9960.9870.9740.98520.9736
LVGI 1.02580.99851.01131.04481.40081.78441.72081.71081.38931.1217
TATA -0.0259-0.0183-0.029-0.028-0.0308-0.0419-0.0348-0.0372-0.0381-0.0352
M-score -2.51-2.46-2.57-2.62-2.79-2.81-2.74-2.67-2.53-2.64
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