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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.
During the past 13 years, the highest Beneish M-Score of Coca-Cola Co was -2.42. The lowest was -2.80. And the median was -2.66.
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 Coca-Cola Co 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 * 0.9335||+||0.528 * 0.993||+||0.404 * 0.9925||+||0.892 * 0.9817||+||0.115 * 0.9807|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0142||+||4.679 * -0.0329||-||0.327 * 1.0718|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $4,466 Mil.|
Revenue was 10872 + 11976 + 12574 + 10576 = $45,998 Mil.
Gross Profit was 6515 + 7346 + 7755 + 6493 = $28,109 Mil.
Total Current Assets was $32,986 Mil.
Total Assets was $92,023 Mil.
Property, Plant and Equipment(Net PPE) was $14,633 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,976 Mil.
Selling, General & Admin. Expense(SGA) was $16,048 Mil.
Total Current Liabilities was $32,374 Mil.
Long-Term Debt was $19,063 Mil.
Net Income was 770 + 2114 + 2595 + 1619 = $7,098 Mil.
Non Operating Income was -394 + -107 + 177 + -170 = $-494 Mil.
Cash Flow from Operations was 2636 + 3509 + 3404 + 1066 = $10,615 Mil.
|Accounts Receivable was $4,873 Mil.
Revenue was 11040 + 12030 + 12749 + 11035 = $46,854 Mil.
Gross Profit was 6725 + 7237 + 7760 + 6711 = $28,433 Mil.
Total Current Assets was $31,304 Mil.
Total Assets was $90,055 Mil.
Property, Plant and Equipment(Net PPE) was $14,967 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,977 Mil.
Selling, General & Admin. Expense(SGA) was $16,117 Mil.
Total Current Liabilities was $27,811 Mil.
Long-Term Debt was $19,154 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(4466 / 45998)||/||(4873 / 46854)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(7346 / 46854)||/||(6515 / 45998)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (32986 + 14633) / 92023)||/||(1 - (31304 + 14967) / 90055)|
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.
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))|
|=||(1977 / (1977 + 14967))||/||(1976 / (1976 + 14633))|
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)|
|=||(16048 / 45998)||/||(16117 / 46854)|
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)|
|=||((19063 + 32374) / 92023)||/||((19154 + 27811) / 90055)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(7098 - -494||-||10615)||/||92023|
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.
Coca-Cola Co has a M-score of -2.75 suggests that the company will not be a manipulator.
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
Coca-Cola Co Annual Data
Coca-Cola Co Quarterly Data