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W W Grainger Inc (NYSE:GWW)
Beneish M-Score
-2.81 (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 -2.81 suggests that the company is not a manipulator.

GWW' s Beneish M-Score Range Over the Past 10 Years
Min: -3.28   Max: -1.89
Current: -2.81

-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 -2.55.


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 * 1.0275+0.528 * 1.0135+0.404 * 1.1914+0.892 * 1.0178+0.115 * 0.9835
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.996+4.679 * -0.0419-0.327 * 1.7844
=-2.81

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
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.
Net Income was 192.201 + 220.548 + 211.015 + 148.839 = $773 Mil.
Non Operating Income was -7.847 + -4.124 + -2.164 + -3.089 = $-17 Mil.
Cash Flow from Operations was 366.425 + 213.296 + 156.209 + 296.981 = $1,033 Mil.
Accounts Receivable was $1,235 Mil.
Revenue was 2562.263 + 2506.104 + 2385.627 + 2377.232 = $9,831 Mil.
Gross Profit was 1102.784 + 1080.686 + 1075.971 + 1006.397 = $4,266 Mil.
Total Current Assets was $3,044 Mil.
Total Assets was $5,326 Mil.
Property, Plant and Equipment(Net PPE) was $1,259 Mil.
Depreciation, Depletion and Amortization(DDA) was $202 Mil.
Selling, General & Admin. Expense(SGA) was $2,928 Mil.
Total Current Liabilities was $1,157 Mil.
Long-Term Debt was $385 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)
=(1291.365 / 10006.085) / (1234.884 / 9831.226)
=0.12905797 / 0.12560834
=1.0275

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)
=(1073.432 / 9831.226) / (1061.879 / 10006.085)
=0.43390702 / 0.42812499
=1.0135

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 - (3104.686 + 1372.992) / 5807.153) / (1 - (3043.663 + 1259.264) / 5326.416)
=0.22893748 / 0.19215341
=1.1914

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
=10006.085 / 9831.226
=1.0178

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))
=(202.2 / (202.2 + 1259.264)) / (224.775 / (224.775 + 1372.992))
=0.13835442 / 0.14068071
=0.9835

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)
=(2968.648 / 10006.085) / (2928.472 / 9831.226)
=0.29668427 / 0.29787455
=0.996

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)
=((1450.624 + 1549.197) / 5807.153) / ((385.191 + 1156.783) / 5326.416)
=0.51657344 / 0.2894956
=1.7844

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
=(772.603 - -17.224 - 1032.911) / 5807.153
=-0.0419

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 -2.81 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 1.13431.04440.93561.37241.04531.13220.94880.99550.97581.2633
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 1.03631.15071.32340.91651.01371.00330.93091.01021.01181.7075
TATA -0.0193-0.0164-0.0156-0.0943-0.022-0.0199-0.0252-0.0361-0.029-0.0388
M-score -2.47-2.54-2.70-2.69-2.37-2.39-2.55-2.51-2.57-2.75

W W Grainger Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1.00321.11141.06411.03841.0781.00840.98420.981.02751.0304
GMI 0.99160.99831.00371.01121.01741.01241.01321.01161.01351.0204
AQI 0.99620.99551.02881.02930.94650.97580.93560.86461.19141.2633
SGI 1.05521.05451.0561.05431.05861.05591.04991.03811.01781.0008
DEPI 0.96630.93840.92940.9650.94960.95650.94910.93680.98350.9893
SGAI 0.96240.96690.97040.97520.98760.98960.99070.97950.9960.987
LVGI 0.92451.01021.06421.02580.99851.01181.04481.40081.78441.7075
TATA -0.0352-0.0361-0.0335-0.0259-0.0183-0.029-0.028-0.0308-0.0419-0.0388
M-score -2.57-2.51-2.54-2.51-2.46-2.57-2.62-2.79-2.81-2.75
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