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Procter & Gamble Co (NYSE:PG)
Beneish M-Score
-2.72 (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 -2.72 suggests that the company is not a manipulator.

PG' s 10-Year Beneish M-Score Range
Min: -3.16   Max: -1.92
Current: -2.72

-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 * 0.9456+0.528 * 1.0148+0.404 * 0.9592+0.892 * 0.9997+0.115 * 0.9635
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9678+4.679 * -0.0374-0.327 * 1.009
=-2.72

* 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 $6,197 Mil.
Revenue was 20792 + 19018 + 20559 + 22280 = $82,649 Mil.
Gross Profit was 10240 + 9099 + 9958 + 11150 = $40,447 Mil.
Total Current Assets was $29,107 Mil.
Total Assets was $138,183 Mil.
Property, Plant and Equipment(Net PPE) was $21,799 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,164 Mil.
Selling, General & Admin. Expense(SGA) was $25,397 Mil.
Total Current Liabilities was $32,071 Mil.
Long-Term Debt was $19,004 Mil.
Net Income was 1990 + 2579 + 2609 + 3428 = $10,606 Mil.
Non Operating Income was 21 + 138 + 20 + 43 = $222 Mil.
Cash Flow from Operations was 3633 + 4506 + 4109 + 3299 = $15,547 Mil.
Accounts Receivable was $6,555 Mil.
Revenue was 20830 + 19069 + 20598 + 22175 = $82,672 Mil.
Gross Profit was 10256 + 9252 + 10254 + 11295 = $41,057 Mil.
Total Current Assets was $26,322 Mil.
Total Assets was $141,125 Mil.
Property, Plant and Equipment(Net PPE) was $21,876 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,043 Mil.
Selling, General & Admin. Expense(SGA) was $26,250 Mil.
Total Current Liabilities was $33,217 Mil.
Long-Term Debt was $18,480 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)
=(6197 / 82649) / (6555 / 82672)
=0.07497973 / 0.07928924
=0.9456

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)
=(9099 / 82672) / (10240 / 82649)
=0.49662522 / 0.48938281
=1.0148

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 - (29107 + 21799) / 138183) / (1 - (26322 + 21876) / 141125)
=0.63160447 / 0.65847298
=0.9592

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
=82649 / 82672
=0.9997

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))
=(3043 / (3043 + 21876)) / (3164 / (3164 + 21799))
=0.12211565 / 0.12674759
=0.9635

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)
=(25397 / 82649) / (26250 / 82672)
=0.30728744 / 0.31751984
=0.9678

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)
=((19004 + 32071) / 138183) / ((18480 + 33217) / 141125)
=0.36961855 / 0.36632064
=1.009

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
=(10606 - 222 - 15547) / 138183
=-0.0374

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 -2.72 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

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.94541.06641.0441.07821.08680.93980.96840.9640.980.9456
GMI 1.02841.01681.00330.99380.98920.99491.00431.01351.01931.0148
AQI 0.98970.98540.98990.99430.98810.98450.98110.96280.93170.9592
SGI 1.02280.9960.99640.99770.98690.99740.99350.98821.00130.9997
DEPI 0.86560.92710.94961.09411.12311.07981.07921.00160.98010.9635
SGAI 0.99851.00291.01341.01111.01830.99750.98820.97230.94810.9678
LVGI 0.97540.96780.97520.97331.01491.02721.02611.061.05151.009
TATA -0.0205-0.0261-0.0172-0.0163-0.0323-0.0251-0.0195-0.0209-0.0175-0.0374
M-score -2.60-2.54-2.53-2.47-2.57-2.66-2.61-2.64-2.61-2.72
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