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Coca-Cola Co (NYSE:KO)
Beneish M-Score
-2.63 (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.

Coca-Cola Co has a M-score of -2.63 suggests that the company is not a manipulator.

KO' s 10-Year Beneish M-Score Range
Min: -2.96   Max: -2.24
Current: -2.63

-2.96
-2.24

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.


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 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 * 1.0794+0.528 * 0.9913+0.404 * 1.0372+0.892 * 0.9683+0.115 * 1.0332
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0002+4.679 * -0.0412-0.327 * 1.0394
=-2.63

* 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 $5,233 Mil.
Revenue was 10576 + 11040 + 12030 + 12749 = $46,395 Mil.
Gross Profit was 6493 + 6725 + 7237 + 7760 = $28,215 Mil.
Total Current Assets was $31,052 Mil.
Total Assets was $91,289 Mil.
Property, Plant and Equipment(Net PPE) was $14,860 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,977 Mil.
Selling, General & Admin. Expense(SGA) was $18,310 Mil.
Total Current Liabilities was $30,056 Mil.
Long-Term Debt was $18,640 Mil.
Net Income was 1619 + 1710 + 2447 + 2676 = $8,452 Mil.
Non Operating Income was -170 + 119 + 862 + 275 = $1,086 Mil.
Cash Flow from Operations was 1066 + 2830 + 3756 + 3478 = $11,130 Mil.
Accounts Receivable was $5,007 Mil.
Revenue was 11035 + 11455 + 12340 + 13085 = $47,915 Mil.
Gross Profit was 6711 + 6827 + 7487 + 7861 = $28,886 Mil.
Total Current Assets was $31,519 Mil.
Total Assets was $88,450 Mil.
Property, Plant and Equipment(Net PPE) was $14,543 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,008 Mil.
Selling, General & Admin. Expense(SGA) was $18,906 Mil.
Total Current Liabilities was $31,102 Mil.
Long-Term Debt was $14,291 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)
=(5233 / 46395) / (5007 / 47915)
=0.11279233 / 0.10449755
=1.0794

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)
=(6725 / 47915) / (6493 / 46395)
=0.60285923 / 0.60814743
=0.9913

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 - (31052 + 14860) / 91289) / (1 - (31519 + 14543) / 88450)
=0.49706975 / 0.4792312
=1.0372

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
=46395 / 47915
=0.9683

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))
=(2008 / (2008 + 14543)) / (1977 / (1977 + 14860))
=0.12132197 / 0.11741997
=1.0332

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)
=(18310 / 46395) / (18906 / 47915)
=0.3946546 / 0.39457372
=1.0002

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)
=((18640 + 30056) / 91289) / ((14291 + 31102) / 88450)
=0.53342681 / 0.5132052
=1.0394

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
=(8452 - 1086 - 11130) / 91289
=-0.0412

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 -2.63 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.

Coca-Cola Co Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.03870.95661.08781.07030.84151.25361.04020.8380.93761.0494
GMI 0.97541.00270.97611.03390.99291.00271.00571.04921.0090.994
AQI 0.88451.09481.07221.07390.94290.89661.13360.98460.97111.0127
SGI 1.03321.06261.04261.1981.1070.97011.13321.32531.03170.9758
DEPI 0.95690.92781.1520.99320.93711.12281.28280.77150.96051.0321
SGAI 1.0050.99211.04520.95010.97180.99441.02510.99640.98691.0001
LVGI 1.02740.95540.91191.11991.02040.99151.15681.06281.0411.056
TATA -0.0536-0.0734-0.0392-0.0465-0.0229-0.0449-0.0542-0.0264-0.03-0.0348
M-score -2.74-2.76-2.49-2.44-2.67-2.51-2.54-2.49-2.67-2.63

Coca-Cola Co Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.85820.85090.95720.93761.02371.02061.01361.04941.07941.0955
GMI 1.04091.02351.00371.0091.0040.99711.00130.9940.99130.9912
AQI 0.97610.99011.00420.97110.99090.9921.00981.01271.03721.0327
SGI 1.23751.12651.03491.03171.0161.00150.9930.97580.96830.9714
DEPI 0.8920.93861.02080.96050.91690.9540.97011.03211.03321.0119
SGAI 0.98660.89680.8211.05761.13751.24681.34551.0691.00021.0709
LVGI 1.07931.13381.03711.0411.04511.03511.05931.0561.03941.0303
TATA -0.023-0.0257-0.0316-0.03-0.0294-0.0274-0.0335-0.0348-0.0412-0.0385
M-score -2.53-2.65-2.61-2.68-2.63-2.65-2.71-2.64-2.63-2.61
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