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Procter & Gamble Co (NYSE:PG)
Beneish M-Score
-2.89 (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.

Procter & Gamble Co has a M-score of -2.89 suggests that the company is not a manipulator.

PG' s 10-Year Beneish M-Score Range
Min: -3.16   Max: -1.92
Current: -2.89

-3.16
-1.92

During the past 13 years, the highest Beneish M-Score of Procter & Gamble Co was -1.92. The lowest was -3.16. 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 Procter & Gamble 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 * 0.8506+0.528 * 1.0123+0.404 * 0.9256+0.892 * 0.9869+0.115 * 0.9194
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9802+4.679 * -0.0465-0.327 * 1.0495
=-2.89

* 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 $5,802 Mil.
Revenue was 20161 + 20792 + 19018 + 20559 = $80,530 Mil.
Gross Profit was 10078 + 10240 + 9099 + 9958 = $39,375 Mil.
Total Current Assets was $33,178 Mil.
Total Assets was $136,263 Mil.
Property, Plant and Equipment(Net PPE) was $20,745 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,155 Mil.
Selling, General & Admin. Expense(SGA) was $24,930 Mil.
Total Current Liabilities was $34,152 Mil.
Long-Term Debt was $18,124 Mil.
Net Income was 2372 + 1990 + 2579 + 2609 = $9,550 Mil.
Non Operating Income was 19 + 21 + 138 + 20 = $198 Mil.
Cash Flow from Operations was 3435 + 3633 + 4506 + 4109 = $15,683 Mil.
Accounts Receivable was $6,911 Mil.
Revenue was 21099 + 20830 + 19069 + 20598 = $81,596 Mil.
Gross Profit was 10625 + 10256 + 9252 + 10254 = $40,387 Mil.
Total Current Assets was $27,467 Mil.
Total Assets was $142,927 Mil.
Property, Plant and Equipment(Net PPE) was $22,152 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,060 Mil.
Selling, General & Admin. Expense(SGA) was $25,770 Mil.
Total Current Liabilities was $30,727 Mil.
Long-Term Debt was $21,517 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)
=(5802 / 80530) / (6911 / 81596)
=0.07204768 / 0.08469778
=0.8506

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)
=(10240 / 81596) / (10078 / 80530)
=0.49496299 / 0.48894822
=1.0123

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 - (33178 + 20745) / 136263) / (1 - (27467 + 22152) / 142927)
=0.60427262 / 0.65283676
=0.9256

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
=80530 / 81596
=0.9869

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))
=(3060 / (3060 + 22152)) / (3155 / (3155 + 20745))
=0.12137078 / 0.13200837
=0.9194

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)
=(24930 / 80530) / (25770 / 81596)
=0.30957407 / 0.31582431
=0.9802

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)
=((18124 + 34152) / 136263) / ((21517 + 30727) / 142927)
=0.38364046 / 0.36552926
=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
=(9550 - 198 - 15683) / 136263
=-0.0465

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.

Procter & Gamble Co has a M-score of -2.89 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.

Procter & Gamble Co Annual Data

Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14
DSRI 0.93341.13781.03290.95410.89290.91521.14480.93721.08680.9756
GMI 1.00420.9890.98881.00761.01690.97721.02181.03070.98921.0204
AQI 0.96461.56281.00281.00311.00991.01460.97720.98970.98810.9317
SGI 1.10381.20231.1211.06890.96670.99881.02741.03180.98691.0058
DEPI 0.94160.94630.88921.03820.97280.98321.18230.86561.12310.9801
SGAI 0.98750.98760.99380.9830.9711.04241.00260.99451.01830.9479
LVGI 1.01340.6690.95040.96641.00950.93141.00120.97541.01491.0515
TATA -0.0342-0.0219-0.0265-0.0236-0.0152-0.0258-0.0135-0.0205-0.0323-0.0175
M-score -2.63-1.95-2.47-2.55-2.67-2.67-2.36-2.60-2.57-2.61

Procter & Gamble Co Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.06641.0441.07821.08680.93980.98250.97790.99420.95940.8506
GMI 1.01681.00330.99380.98920.99491.00281.01211.01791.01351.0123
AQI 0.98540.98990.99430.98810.98450.98110.96280.93170.95920.9256
SGI 0.9960.99640.99770.98690.99740.97930.97410.9870.98540.9869
DEPI 0.92710.94961.09411.12311.07981.07921.00160.98010.96350.9194
SGAI 1.00291.01341.01111.01830.99750.99190.97590.95130.97120.9802
LVGI 0.96780.97520.97331.01491.02721.02611.061.05151.0091.0495
TATA -0.0261-0.0172-0.0163-0.0323-0.0251-0.0195-0.0209-0.0175-0.0374-0.0465
M-score -2.54-2.53-2.47-2.57-2.66-2.61-2.65-2.61-2.72-2.89
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