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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 -2.25. 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 * 1.0781||+||0.528 * 1.0003||+||0.404 * 1.0128||+||0.892 * 0.94||+||0.115 * 0.939|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 2.0067||+||4.679 * -0.0215||-||0.327 * 1.024|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $4,082 Mil.|
Revenue was 10633 + 11539 + 10282 + 10000 = $42,454 Mil.
Gross Profit was 6502 + 7068 + 6213 + 5946 = $25,729 Mil.
Total Current Assets was $37,956 Mil.
Total Assets was $93,927 Mil.
Property, Plant and Equipment(Net PPE) was $11,172 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,850 Mil.
Selling, General & Admin. Expense(SGA) was $9,629 Mil.
Total Current Liabilities was $27,792 Mil.
Long-Term Debt was $31,663 Mil.
Net Income was 1046 + 3448 + 1483 + 1237 = $7,214 Mil.
Non Operating Income was -825 + 1438 + -250 + 9 = $372 Mil.
Cash Flow from Operations was 2903 + 3216 + 604 + 2138 = $8,861 Mil.
|Accounts Receivable was $4,028 Mil.
Revenue was 11427 + 12156 + 10711 + 10872 = $45,166 Mil.
Gross Profit was 6850 + 7408 + 6608 + 6515 = $27,381 Mil.
Total Current Assets was $36,594 Mil.
Total Assets was $93,008 Mil.
Property, Plant and Equipment(Net PPE) was $12,615 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,942 Mil.
Selling, General & Admin. Expense(SGA) was $5,105 Mil.
Total Current Liabilities was $31,545 Mil.
Long-Term Debt was $25,949 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)|
|=||(4082 / 42454)||/||(4028 / 45166)|
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)|
|=||(27381 / 45166)||/||(25729 / 42454)|
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 - (37956 + 11172) / 93927)||/||(1 - (36594 + 12615) / 93008)|
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))|
|=||(1942 / (1942 + 12615))||/||(1850 / (1850 + 11172))|
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)|
|=||(9629 / 42454)||/||(5105 / 45166)|
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)|
|=||((31663 + 27792) / 93927)||/||((25949 + 31545) / 93008)|
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|
|=||(7214 - 372||-||8861)||/||93927|
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 -2.74 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