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Coca-Cola Co (NYSE:KO)
Beneish M-Score
-2.78 (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 -2.78 suggests that the company is not a manipulator.

KO' s Beneish M-Score Range Over the Past 10 Years
Min: -2.96   Max: -2.25
Current: -2.78

-2.96
-2.25

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.


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 * 0.9777+0.528 * 1.0159+0.404 * 0.9433+0.892 * 0.9508+0.115 * 0.9021
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0765+4.679 * -0.0348-0.327 * 1.1075
=-2.78

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $4,147 Mil.
Revenue was 10282 + 10000 + 11427 + 12156 = $43,865 Mil.
Gross Profit was 6213 + 5946 + 6850 + 7408 = $26,417 Mil.
Total Current Assets was $36,510 Mil.
Total Assets was $91,263 Mil.
Property, Plant and Equipment(Net PPE) was $12,613 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,955 Mil.
Selling, General & Admin. Expense(SGA) was $7,039 Mil.
Total Current Liabilities was $30,987 Mil.
Long-Term Debt was $26,990 Mil.
Net Income was 1483 + 1237 + 1449 + 3108 = $7,277 Mil.
Non Operating Income was -250 + 9 + -671 + 1805 = $893 Mil.
Cash Flow from Operations was 604 + 2138 + 3272 + 3544 = $9,558 Mil.
Accounts Receivable was $4,461 Mil.
Revenue was 10711 + 10872 + 11976 + 12574 = $46,133 Mil.
Gross Profit was 6608 + 6515 + 7346 + 7755 = $28,224 Mil.
Total Current Assets was $32,119 Mil.
Total Assets was $91,016 Mil.
Property, Plant and Equipment(Net PPE) was $14,346 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,976 Mil.
Selling, General & Admin. Expense(SGA) was $6,877 Mil.
Total Current Liabilities was $26,123 Mil.
Long-Term Debt was $26,087 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)
=(4147 / 43865) / (4461 / 46133)
=0.09454007 / 0.09669868
=0.9777

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)
=(28224 / 46133) / (26417 / 43865)
=0.61179633 / 0.60223413
=1.0159

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 - (36510 + 12613) / 91263) / (1 - (32119 + 14346) / 91016)
=0.46174244 / 0.48948537
=0.9433

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
=43865 / 46133
=0.9508

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))
=(1976 / (1976 + 14346)) / (1955 / (1955 + 12613))
=0.1210636 / 0.13419824
=0.9021

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)
=(7039 / 43865) / (6877 / 46133)
=0.16046962 / 0.149069
=1.0765

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)
=((26990 + 30987) / 91263) / ((26087 + 26123) / 91016)
=0.63527388 / 0.5736354
=1.1075

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
=(7277 - 893 - 9558) / 91263
=-0.0348

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 -2.78 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.08781.07030.84151.25361.04020.8380.93761.04940.93350.9164
GMI 0.97611.03390.99291.00271.00571.04921.0090.9940.9931.0095
AQI 1.07221.07390.94290.89661.13360.98460.97111.01270.99251.0151
SGI 1.04261.1981.1070.97011.13321.32531.03170.97580.98170.963
DEPI 1.1520.99320.93711.12281.28280.77150.96051.03210.98070.8782
SGAI 1.04520.95010.97180.99441.02510.99640.98690.57271.041.0505
LVGI 0.91191.11991.02040.99151.15681.06281.0411.0561.07181.0989
TATA -0.0392-0.0465-0.0229-0.0449-0.0542-0.0264-0.03-0.0348-0.0329-0.0477
M-score -2.49-2.44-2.67-2.51-2.54-2.49-2.67-2.56-2.75-2.86

Coca-Cola Co Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.04941.07941.09551.01690.93350.85730.85710.81030.91640.9777
GMI 0.9940.99130.99120.98410.9930.9941.00091.01191.00951.0159
AQI 1.01271.03721.03270.98890.99250.98471.01360.98331.01510.9433
SGI 0.97580.96830.97140.97670.98170.99440.98910.97830.9630.9508
DEPI 1.03211.03321.01190.9880.98070.96990.97890.89960.87820.9021
SGAI 0.47260.56670.43320.41220.97840.71160.8820.84440.88811.0765
LVGI 1.0561.03941.03031.03981.07181.07541.09171.12611.09891.1075
TATA -0.0348-0.0412-0.0385-0.029-0.0329-0.0411-0.0534-0.0522-0.0477-0.0348
M-score -2.54-2.55-2.50-2.55-2.74-2.80-2.88-2.94-2.83-2.78
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