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Procter & Gamble Co (NYSE:PG)
Beneish M-Score
-2.97 (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 -2.97 suggests that the company is not a manipulator.

PG' s Beneish M-Score Range Over the Past 10 Years
Min: -3.16   Max: -1.92
Current: -2.97

-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 * 0.8973+0.528 * 0.9786+0.404 * 0.9468+0.892 * 0.9068+0.115 * 0.951
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9726+4.679 * -0.0587-0.327 * 1.0021
=-2.97

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $4,721 Mil.
Revenue was 16915 + 16527 + 17790 + 18142 = $69,374 Mil.
Gross Profit was 8455 + 8375 + 8533 + 8815 = $34,178 Mil.
Total Current Assets was $36,347 Mil.
Total Assets was $129,143 Mil.
Property, Plant and Equipment(Net PPE) was $18,910 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,048 Mil.
Selling, General & Admin. Expense(SGA) was $20,464 Mil.
Total Current Liabilities was $32,053 Mil.
Long-Term Debt was $17,595 Mil.
Net Income was 3206 + 2601 + 521 + 2153 = $8,481 Mil.
Non Operating Income was 35 + -18 + 438 + 53 = $508 Mil.
Cash Flow from Operations was 4480 + 3538 + 3988 + 3552 = $15,558 Mil.
Accounts Receivable was $5,802 Mil.
Revenue was 18495 + 18771 + 19596 + 19641 = $76,503 Mil.
Gross Profit was 8937 + 9037 + 9308 + 9601 = $36,883 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 $23,203 Mil.
Total Current Liabilities was $34,152 Mil.
Long-Term Debt was $18,124 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)
=(4721 / 69374) / (5802 / 76503)
=0.06805143 / 0.07584016
=0.8973

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)
=(8375 / 76503) / (8455 / 69374)
=0.48211181 / 0.49266296
=0.9786

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 - (36347 + 18910) / 129143) / (1 - (33178 + 20745) / 136263)
=0.57212547 / 0.60427262
=0.9468

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
=69374 / 76503
=0.9068

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))
=(3155 / (3155 + 20745)) / (3048 / (3048 + 18910))
=0.13200837 / 0.13881046
=0.951

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)
=(20464 / 69374) / (23203 / 76503)
=0.29498083 / 0.3032953
=0.9726

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)
=((17595 + 32053) / 129143) / ((18124 + 34152) / 136263)
=0.38444205 / 0.38364046
=1.0021

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
=(8481 - 508 - 15558) / 129143
=-0.0587

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 -2.97 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

Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15
DSRI 1.13781.03290.95410.92010.88821.14480.93721.08681.00650.8034
GMI 0.9890.98881.00761.04210.95361.02181.03070.98921.01661.0006
AQI 1.56281.00281.00311.00991.01460.97720.98970.98810.93170.9813
SGI 1.20231.1211.06890.93821.02931.02741.03180.98690.97490.9474
DEPI 0.94630.88921.03820.97280.98321.18230.86561.12310.98010.9218
SGAI 0.98760.99380.9830.94321.07321.00260.99451.01830.95651.0054
LVGI 0.6690.95040.96641.00950.93141.00120.97541.01491.05151.0013
TATA -0.0219-0.0265-0.0236-0.0139-0.0258-0.0135-0.0205-0.0323-0.0175-0.0626
M-score -1.95-2.47-2.55-2.64-2.69-2.36-2.60-2.57-2.61-3.02

Procter & Gamble Co Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.93980.98250.98910.99840.9880.89540.84450.84410.84990.8973
GMI 0.99491.00281.00971.01741.01861.02671.02381.01590.99810.9786
AQI 0.98450.98110.96280.93170.95920.92560.93490.98130.91330.9468
SGI 0.99740.97930.96320.98290.95690.93760.93010.90180.89690.9068
DEPI 1.07981.07921.00160.98010.96350.91940.90230.92180.91430.951
SGAI 0.99750.99190.9790.95410.96220.96030.96310.98050.97890.9726
LVGI 1.02721.02611.061.05151.0091.04951.0171.00131.02471.0021
TATA -0.0251-0.0195-0.0209-0.0175-0.0373-0.0464-0.0478-0.0625-0.0569-0.0587
M-score -2.66-2.61-2.65-2.61-2.71-2.88-2.93-3.01-3.03-2.97
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