Switch to:
GuruFocus has detected 8 Warning Signs with Coca-Cola Co $KO.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Coca-Cola Co (NYSE:KO)
Beneish M-Score
-2.62 (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 -2.62 suggests that the company is not a manipulator.

KO' s Beneish M-Score Range Over the Past 10 Years
Min: -2.9   Max: -2.42
Current: -2.62

-2.9
-2.42

During the past 13 years, the highest Beneish M-Score of Coca-Cola Co was -2.42. The lowest was -2.90. And the median was -2.64.


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 * 1.0352+0.528 * 0.9977+0.404 * 0.9983+0.892 * 0.9451+0.115 * 0.9418
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9756+4.679 * -0.0214-0.327 * 1.0495
=-2.62

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $3,856 Mil.
Revenue was 9409 + 10633 + 11539 + 10282 = $41,863 Mil.
Gross Profit was 5615 + 6502 + 7068 + 6213 = $25,398 Mil.
Total Current Assets was $34,010 Mil.
Total Assets was $87,270 Mil.
Property, Plant and Equipment(Net PPE) was $10,635 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,787 Mil.
Selling, General & Admin. Expense(SGA) was $9,439 Mil.
Total Current Liabilities was $26,532 Mil.
Long-Term Debt was $29,684 Mil.
Net Income was 550 + 1046 + 3448 + 1483 = $6,527 Mil.
Non Operating Income was -762 + -825 + 1438 + -250 = $-399 Mil.
Cash Flow from Operations was 2073 + 2903 + 3216 + 604 = $8,796 Mil.
Accounts Receivable was $3,941 Mil.
Revenue was 10000 + 11427 + 12156 + 10711 = $44,294 Mil.
Gross Profit was 5946 + 6850 + 7408 + 6608 = $26,812 Mil.
Total Current Assets was $33,395 Mil.
Total Assets was $89,996 Mil.
Property, Plant and Equipment(Net PPE) was $12,571 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,970 Mil.
Selling, General & Admin. Expense(SGA) was $10,237 Mil.
Total Current Liabilities was $26,929 Mil.
Long-Term Debt was $28,311 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)
=(3856 / 41863) / (3941 / 44294)
=0.09210998 / 0.08897368
=1.0352

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)
=(26812 / 44294) / (25398 / 41863)
=0.605319 / 0.60669326
=0.9977

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 - (34010 + 10635) / 87270) / (1 - (33395 + 12571) / 89996)
=0.48842672 / 0.48924397
=0.9983

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
=41863 / 44294
=0.9451

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))
=(1970 / (1970 + 12571)) / (1787 / (1787 + 10635))
=0.13547899 / 0.14385767
=0.9418

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)
=(9439 / 41863) / (10237 / 44294)
=0.22547357 / 0.23111482
=0.9756

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)
=((29684 + 26532) / 87270) / ((28311 + 26929) / 89996)
=0.6441618 / 0.61380506
=1.0495

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
=(6527 - -399 - 8796) / 87270
=-0.0214

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.


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 local exchange's currency.

Coca-Cola Co Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.07030.84151.25361.04020.8380.93761.04940.93350.91641.0352
GMI 1.03390.99291.00271.00571.04921.0090.9940.9931.00950.9977
AQI 1.07390.94290.89661.13360.98460.97111.01270.99251.01390.9983
SGI 1.1981.1070.97011.13321.32531.03170.97580.98170.9630.9451
DEPI 0.99320.93711.12281.28280.77150.96051.03210.98070.87820.9418
SGAI 0.95010.97180.99441.02510.99640.98690.57271.041.05050.9756
LVGI 1.11991.02040.99151.15681.06281.0411.0561.07181.09811.0495
TATA -0.0465-0.0229-0.0449-0.0542-0.0264-0.03-0.0348-0.0329-0.0477-0.0214
M-score -2.44-2.67-2.51-2.54-2.49-2.67-2.56-2.75-2.86-2.62

Coca-Cola Co Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.01690.93350.85730.85710.81030.91640.97771.01291.07811.0352
GMI 0.98410.9930.9941.00091.01191.00951.01591.01131.00030.9977
AQI 0.98890.99250.98471.01360.98331.01390.94330.97671.01280.9983
SGI 0.97670.98170.99440.98910.97830.9630.95080.9460.940.9451
DEPI 0.9880.98070.96990.97890.89960.87820.90210.91930.9390.9418
SGAI 0.41220.97840.71160.8820.64771.26941.54671.492.00670.9756
LVGI 1.03981.07181.07541.09171.12611.09811.10751.0661.0241.0495
TATA -0.029-0.0329-0.0411-0.0534-0.0522-0.0477-0.0348-0.0227-0.0215-0.0214
M-score -2.55-2.74-2.80-2.88-2.91-2.89-2.86-2.74-2.74-2.62
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK