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W W Grainger Inc (NYSE:GWW)
Beneish M-Score
-2.46 (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 -2.46 suggests that the company is not a manipulator.

GWW' s 10-Year Beneish M-Score Range
Min: -3.28   Max: -1.89
Current: -2.46

-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 * 1.078+0.528 * 1.0174+0.404 * 0.9465+0.892 * 1.0586+0.115 * 0.9496
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9876+4.679 * -0.0183-0.327 * 0.9985
=-2.46

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
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.
Net Income was 230.322 + 205.915 + 216.653 + 156.749 = $810 Mil.
Non Operating Income was -1.131 + 0.018 + -0.503 + -0.063 = $-2 Mil.
Cash Flow from Operations was 334.367 + 160.948 + 167.518 + 246.07 = $909 Mil.
Accounts Receivable was $1,082 Mil.
Revenue was 2398.53 + 2381.561 + 2280.435 + 2226.12 = $9,287 Mil.
Gross Profit was 1051.366 + 1046.984 + 1031.736 + 969.525 = $4,100 Mil.
Total Current Assets was $3,049 Mil.
Total Assets was $5,252 Mil.
Property, Plant and Equipment(Net PPE) was $1,136 Mil.
Depreciation, Depletion and Amortization(DDA) was $172 Mil.
Selling, General & Admin. Expense(SGA) was $2,801 Mil.
Total Current Liabilities was $1,074 Mil.
Long-Term Debt was $448 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)
=(1234.884 / 9831.226) / (1082.108 / 9286.646)
=0.12560834 / 0.11652302
=1.078

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)
=(1080.686 / 9286.646) / (1102.784 / 9831.226)
=0.44145227 / 0.43390702
=1.0174

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 - (3043.663 + 1259.264) / 5326.416) / (1 - (3049.097 + 1136.316) / 5251.549)
=0.19215341 / 0.20301363
=0.9465

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
=9831.226 / 9286.646
=1.0586

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))
=(171.875 / (171.875 + 1136.316)) / (202.2 / (202.2 + 1259.264))
=0.13138372 / 0.13835442
=0.9496

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)
=(2928.472 / 9831.226) / (2801.081 / 9286.646)
=0.29787455 / 0.30162461
=0.9876

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)
=((385.191 + 1156.783) / 5326.416) / ((448.127 + 1074.492) / 5251.549)
=0.2894956 / 0.28993712
=0.9985

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
=(809.639 - -1.679 - 908.903) / 5326.416
=-0.0183

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 -2.46 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

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.02830.96210.95470.97990.99771.00321.11141.06411.03841.078
GMI 0.97580.98290.99320.99110.99080.99160.99831.00371.01121.0174
AQI 1.21910.96060.94880.93170.91210.99620.99551.02881.02930.9465
SGI 1.13421.12431.10791.07741.0621.05521.05451.0561.05431.0586
DEPI 1.00730.98511.01111.00440.97990.96630.93840.92940.9650.9496
SGAI 1.02811.05481.02251.01591.0160.96240.96690.97040.97520.9876
LVGI 0.99060.92790.93090.9620.94850.92451.01021.06421.02580.9985
TATA 0.0059-0.0175-0.0252-0.0344-0.0447-0.0352-0.0361-0.0335-0.0259-0.0183
M-score -2.23-2.50-2.55-2.61-2.66-2.57-2.51-2.54-2.51-2.46
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