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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 10-Year Beneish M-Score Range
Min: -2.96   Max: -2.24
Current: -2.62

-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 * 1.0169+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
=-2.62

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

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

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)
=(5081 / 46166) / (5116 / 47269)
=0.11005935 / 0.10823161
=1.0169

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)
=(7755 / 47269) / (7346 / 46166)
=0.6036726 / 0.6134168
=0.9841

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 - (35452 + 14738) / 96314) / (1 - (31576 + 14548) / 89432)
=0.47889196 / 0.48425619
=0.9889

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
=46166 / 47269
=0.9767

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))
=0.11857013 / 0.12001433
=0.988

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)
=0.34720357 / 0.42332184
=0.8202

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)
=0.54894408 / 0.52794302
=1.0398

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
=(8038 - 19 - 10809) / 96314
=-0.029

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 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

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.85090.95720.93761.02371.02061.01361.04941.07941.09551.0169
GMI 1.02351.00371.0091.0040.99711.00130.9940.99130.99120.9841
AQI 0.99011.00420.97110.99090.9921.00981.01271.03721.03270.9889
SGI 1.12651.03491.03171.0161.00150.9930.97580.96830.97140.9767
DEPI 0.93861.02080.96050.91690.9540.97011.03211.03321.01190.988
SGAI 0.89680.8211.05761.06571.25361.44640.93120.92980.86630.8202
LVGI 1.13381.03711.0411.04511.03511.05931.0561.03941.03031.0398
TATA -0.0257-0.0316-0.03-0.0294-0.0274-0.0335-0.0348-0.0412-0.0385-0.029
M-score -2.65-2.61-2.68-2.62-2.65-2.73-2.62-2.61-2.57-2.62
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