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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.
Coca-Cola Co has a M-score of -2.62 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Coca-Cola Co was -2.24. The lowest was -2.96. And the median was -2.61.
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 * 1.0169||+||0.528 * 0.9841||+||0.404 * 0.9889||+||0.892 * 0.9767||+||0.115 * 0.988|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8202||+||4.679 * -0.029||-||0.327 * 1.0398|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $5,081 Mil.|
Revenue was 11976 + 12574 + 10576 + 11040 = $46,166 Mil.
Gross Profit was 7346 + 7755 + 6493 + 6725 = $28,319 Mil.
Total Current Assets was $35,452 Mil.
Total Assets was $96,314 Mil.
Property, Plant and Equipment(Net PPE) was $14,738 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,010 Mil.
Selling, General & Admin. Expense(SGA) was $16,029 Mil.
Total Current Liabilities was $32,760 Mil.
Long-Term Debt was $20,111 Mil.
Net Income was 2114 + 2595 + 1619 + 1710 = $8,038 Mil.
Non Operating Income was -107 + 177 + -170 + 119 = $19 Mil.
Cash Flow from Operations was 3509 + 3404 + 1066 + 2830 = $10,809 Mil.
|Accounts Receivable was $5,116 Mil.
Revenue was 12030 + 12749 + 11035 + 11455 = $47,269 Mil.
Gross Profit was 7237 + 7760 + 6711 + 6827 = $28,535 Mil.
Total Current Assets was $31,576 Mil.
Total Assets was $89,432 Mil.
Property, Plant and Equipment(Net PPE) was $14,548 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,957 Mil.
Selling, General & Admin. Expense(SGA) was $20,010 Mil.
Total Current Liabilities was $33,042 Mil.
Long-Term Debt was $14,173 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)|
|=||(5081 / 46166)||/||(5116 / 47269)|
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)|
|=||(7755 / 47269)||/||(7346 / 46166)|
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 - (35452 + 14738) / 96314)||/||(1 - (31576 + 14548) / 89432)|
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))|
|=||(1957 / (1957 + 14548))||/||(2010 / (2010 + 14738))|
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)|
|=||(16029 / 46166)||/||(20010 / 47269)|
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)|
|=||((20111 + 32760) / 96314)||/||((14173 + 33042) / 89432)|
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|
|=||(8038 - 19||-||10809)||/||96314|
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 -2.62 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