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W W Grainger Inc (NYSE:GWW)
Beneish M-Score
-2.54 (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 -2.54 suggests that the company is not a manipulator.

GWW' s 10-Year Beneish M-Score Range
Min: -3.28   Max: -1.89
Current: -2.54

-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 * 1.0641+0.528 * 1.0037+0.404 * 1.0288+0.892 * 1.056+0.115 * 0.9294
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9704+4.679 * -0.0335-0.327 * 1.0642
=-2.54

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
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.
Net Income was 216.653 + 156.749 + 210.789 + 217.66 = $802 Mil.
Non Operating Income was -0.503 + -0.063 + 0.058 + -0.147 = $-1 Mil.
Cash Flow from Operations was 167.518 + 246.07 + 353.605 + 210.406 = $978 Mil.
Accounts Receivable was $1,032 Mil.
Revenue was 2280.435 + 2226.12 + 2281.205 + 2249.275 = $9,037 Mil.
Gross Profit was 1031.736 + 969.525 + 993.96 + 978.343 = $3,974 Mil.
Total Current Assets was $2,923 Mil.
Total Assets was $5,014 Mil.
Property, Plant and Equipment(Net PPE) was $1,133 Mil.
Depreciation, Depletion and Amortization(DDA) was $161 Mil.
Selling, General & Admin. Expense(SGA) was $2,803 Mil.
Total Current Liabilities was $989 Mil.
Long-Term Debt was $455 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)
=(1159.556 / 9542.95) / (1031.92 / 9037.035)
=0.12150918 / 0.11418789
=1.0641

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)
=(1006.397 / 9037.035) / (1075.971 / 9542.95)
=0.43969775 / 0.43809493
=1.0037

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 - (2995.664 + 1210.778) / 5234.229) / (1 - (2923.428 + 1133.406) / 5013.728)
=0.19635881 / 0.19085479
=1.0288

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
=9542.95 / 9037.035
=1.056

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))
=(161.315 / (161.315 + 1133.406)) / (187.444 / (187.444 + 1210.778))
=0.12459441 / 0.13405883
=0.9294

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)
=(2872.829 / 9542.95) / (2803.495 / 9037.035)
=0.30104203 / 0.31022288
=0.9704

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)
=((438.068 + 1166.137) / 5234.229) / ((454.527 + 989.422) / 5013.728)
=0.30648353 / 0.28799907
=1.0642

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
=(801.851 - -0.655 - 977.599) / 5234.229
=-0.0335

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 -2.54 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.0290.98541.02620.97510.91641.16721.05761.03570.95471.1114
GMI 0.92960.96540.97750.98630.98960.98160.9980.96290.99320.9983
AQI 1.05671.08421.13431.04440.93561.37241.04531.13220.94880.9955
SGI 1.0821.09441.06461.09081.06730.90831.15431.12481.10791.0545
DEPI 0.96050.92380.9510.99571.00150.97340.99691.08981.01110.9384
SGAI 1.08241.0241.01570.99770.98181.05080.96131.01891.02250.9669
LVGI 0.86970.95561.03631.15071.32340.91651.01371.00330.93091.0102
TATA -0.0432-0.0286-0.0193-0.0164-0.0156-0.0943-0.022-0.0199-0.0252-0.0361
M-score -2.57-2.53-2.47-2.54-2.70-2.69-2.37-2.39-2.55-2.51

W W Grainger Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1.06381.02830.96210.95470.97990.99771.00321.11141.06411.0384
GMI 0.97130.97580.98290.99320.99110.99080.99160.99831.00371.0112
AQI 1.14031.21910.96060.94880.93170.91210.99620.99551.02881.0198
SGI 1.13451.13421.12431.10791.07741.0621.05521.05451.0561.0543
DEPI 1.05251.00730.98511.01111.00440.97990.96630.93840.92940.965
SGAI 1.03121.02811.05481.02251.01591.0160.96240.96690.97040.9752
LVGI 0.98520.99060.92790.93090.9620.94850.92451.01021.06421.0258
TATA -0.01110.0059-0.0175-0.0252-0.0344-0.0447-0.0352-0.0361-0.0335-0.0259
M-score -2.31-2.23-2.50-2.55-2.61-2.66-2.57-2.51-2.54-2.51
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