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Coca-Cola Co (NYSE:KO)
Beneish M-Score
-2.75 (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 -2.75 suggests that the company is not a manipulator.

KO' s 10-Year Beneish M-Score Range
Min: -2.8   Max: -2.42
Current: -2.75

-2.8
-2.42

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.


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 * 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
=-2.75

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

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

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)
=(4466 / 45998) / (4873 / 46854)
=0.09709118 / 0.10400393
=0.9335

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)
=(7346 / 46854) / (6515 / 45998)
=0.60684253 / 0.61109179
=0.993

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 - (32986 + 14633) / 92023) / (1 - (31304 + 14967) / 90055)
=0.48253154 / 0.48619177
=0.9925

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
=45998 / 46854
=0.9817

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))
=0.11667847 / 0.11897164
=0.9807

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)
=0.34888473 / 0.34398344
=1.0142

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)
=0.55895809 / 0.52151463
=1.0718

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
=(7098 - -494 - 10615) / 92023
=-0.0329

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.


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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.95661.08781.07030.84151.25361.04020.8380.93761.04940.9335
GMI 1.00270.97611.03390.99291.00271.00571.04921.0090.9940.993
AQI 1.09481.07221.07390.94290.89661.13360.98460.97111.01270.9925
SGI 1.06261.04261.1981.1070.97011.13321.32531.03170.97580.9817
DEPI 0.92781.1520.99320.93711.12281.28280.77150.96051.03210.9807
SGAI 0.99211.04520.95010.97180.99441.02510.99640.98691.00011.0132
LVGI 0.95540.91191.11991.02040.99151.15681.06281.0411.0561.0718
TATA -0.0734-0.0392-0.0465-0.0229-0.0449-0.0542-0.0264-0.03-0.0348-0.0329
M-score -2.76-2.49-2.44-2.67-2.51-2.54-2.49-2.67-2.63-2.75

Coca-Cola Co Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 0.93761.02371.02061.01361.04941.07941.09551.01690.93350.8573
GMI 1.0091.0040.99711.00130.9940.99130.99120.98410.9930.994
AQI 0.97110.99090.9921.00981.01271.03721.03270.98890.99250.9847
SGI 1.03171.0161.00150.9930.97580.96830.97140.97670.98170.9944
DEPI 0.96050.91690.9540.97011.03211.03321.01190.9880.98070.9699
SGAI 1.05761.06571.25361.44640.93120.92980.86630.82021.01421.0915
LVGI 1.0411.04511.03511.05931.0561.03941.03031.03981.07181.0754
TATA -0.03-0.0294-0.0274-0.0335-0.0348-0.0412-0.0385-0.029-0.0329-0.0411
M-score -2.68-2.62-2.65-2.73-2.62-2.61-2.57-2.62-2.75-2.86
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