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W W Grainger Inc (NYSE:GWW)
Beneish M-Score
-2.57 (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 -2.57 suggests that the company is not a manipulator.

GWW' s 10-Year Beneish M-Score Range
Min: -3.26   Max: -1.89
Current: -2.57

-3.26
-1.89

During the past 13 years, the highest Beneish M-Score of W W Grainger Inc was -1.89. The lowest was -3.26. And the median was -2.57.


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 * 1.0084+0.528 * 1.0124+0.404 * 0.9758+0.892 * 1.0559+0.115 * 0.9565
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9896+4.679 * -0.029-0.327 * 1.0118
=-2.57

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $1,173 Mil.
Revenue was 2510.959 + 2562.263 + 2506.104 + 2385.627 = $9,965 Mil.
Gross Profit was 1054.801 + 1102.784 + 1080.686 + 1075.971 = $4,314 Mil.
Total Current Assets was $2,968 Mil.
Total Assets was $5,284 Mil.
Property, Plant and Equipment(Net PPE) was $1,324 Mil.
Depreciation, Depletion and Amortization(DDA) was $208 Mil.
Selling, General & Admin. Expense(SGA) was $2,967 Mil.
Total Current Liabilities was $1,262 Mil.
Long-Term Debt was $405 Mil.
Net Income was 148.839 + 230.322 + 205.915 + 216.653 = $802 Mil.
Non Operating Income was -3.089 + -1.131 + 0.018 + -0.503 = $-5 Mil.
Cash Flow from Operations was 296.981 + 334.367 + 160.948 + 167.518 = $960 Mil.
Accounts Receivable was $1,102 Mil.
Revenue was 2377.232 + 2398.53 + 2381.561 + 2280.435 = $9,438 Mil.
Gross Profit was 1006.397 + 1051.366 + 1046.984 + 1031.736 = $4,136 Mil.
Total Current Assets was $3,044 Mil.
Total Assets was $5,266 Mil.
Property, Plant and Equipment(Net PPE) was $1,209 Mil.
Depreciation, Depletion and Amortization(DDA) was $181 Mil.
Selling, General & Admin. Expense(SGA) was $2,840 Mil.
Total Current Liabilities was $1,196 Mil.
Long-Term Debt was $446 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)
=(1172.924 / 9964.953) / (1101.656 / 9437.758)
=0.11770492 / 0.11672857
=1.0084

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)
=(1102.784 / 9437.758) / (1054.801 / 9964.953)
=0.43829085 / 0.43294153
=1.0124

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 - (2967.549 + 1324.346) / 5284.252) / (1 - (3044.285 + 1208.562) / 5266.328)
=0.18779517 / 0.19244548
=0.9758

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
=9964.953 / 9437.758
=1.0559

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))
=(180.613 / (180.613 + 1208.562)) / (208.326 / (208.326 + 1324.346))
=0.13001458 / 0.13592341
=0.9565

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)
=(2967.125 / 9964.953) / (2839.628 / 9437.758)
=0.29775605 / 0.30087951
=0.9896

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)
=((404.536 + 1261.716) / 5284.252) / ((445.513 + 1195.79) / 5266.328)
=0.3153241 / 0.31165985
=1.0118

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
=(801.729 - -4.705 - 959.814) / 5284.252
=-0.029

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 -2.57 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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