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Procter & Gamble Co (NYSE:PG)
Beneish M-Score
-3.02 (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 -3.02 suggests that the company is not a manipulator.

PG' s 10-Year Beneish M-Score Range
Min: -3.02   Max: -1.95
Current: -3.02

-3.02
-1.95

During the past 13 years, the highest Beneish M-Score of Procter & Gamble Co was -1.95. The lowest was -3.02. And the median was -2.62.


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 * 0.8036+0.528 * 1.0007+0.404 * 0.9813+0.892 * 0.9473+0.115 * 0.9218
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0054+4.679 * -0.0626-0.327 * 1.0013
=-3.02

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $4,861 Mil.
Revenue was 17790 + 18142 + 20161 + 20792 = $76,885 Mil.
Gross Profit was 8533 + 8815 + 10078 + 10240 = $37,666 Mil.
Total Current Assets was $29,646 Mil.
Total Assets was $129,495 Mil.
Property, Plant and Equipment(Net PPE) was $20,268 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,134 Mil.
Selling, General & Admin. Expense(SGA) was $23,713 Mil.
Total Current Liabilities was $29,790 Mil.
Long-Term Debt was $18,329 Mil.
Net Income was 521 + 2153 + 2372 + 1990 = $7,036 Mil.
Non Operating Income was 438 + 53 + 19 + 21 = $531 Mil.
Cash Flow from Operations was 3988 + 3552 + 3435 + 3633 = $14,608 Mil.
Accounts Receivable was $6,386 Mil.
Revenue was 19596 + 19641 + 21099 + 20830 = $81,166 Mil.
Gross Profit was 9308 + 9601 + 10625 + 10256 = $39,790 Mil.
Total Current Assets was $31,617 Mil.
Total Assets was $144,266 Mil.
Property, Plant and Equipment(Net PPE) was $22,304 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,141 Mil.
Selling, General & Admin. Expense(SGA) was $24,900 Mil.
Total Current Liabilities was $33,726 Mil.
Long-Term Debt was $19,811 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)
=(4861 / 76885) / (6386 / 81166)
=0.0632243 / 0.07867826
=0.8036

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)
=(8815 / 81166) / (8533 / 76885)
=0.4902299 / 0.4899005
=1.0007

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 - (29646 + 20268) / 129495) / (1 - (31617 + 22304) / 144266)
=0.61454882 / 0.62623903
=0.9813

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
=76885 / 81166
=0.9473

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))
=(3141 / (3141 + 22304)) / (3134 / (3134 + 20268))
=0.12344272 / 0.13392018
=0.9218

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)
=(23713 / 76885) / (24900 / 81166)
=0.30842167 / 0.3067787
=1.0054

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)
=((18329 + 29790) / 129495) / ((19811 + 33726) / 144266)
=0.37158964 / 0.37109922
=1.0013

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
=(7036 - 531 - 14608) / 129495
=-0.0626

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 -3.02 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 1.13781.03290.95410.89290.91521.12460.95411.06630.99430.8289
GMI 0.9890.98881.00761.01690.97721.02661.02590.9951.01450.9969
AQI 1.56281.00281.00311.00991.01460.97720.98970.98810.93170.9813
SGI 1.20231.1211.06890.96670.99881.04591.01361.00580.98690.9183
DEPI 0.94630.88921.03820.97280.98321.18230.86561.12310.98010.9218
SGAI 0.98760.99380.9830.9711.04240.99341.00361.01410.95181.0145
LVGI 0.6690.95040.96641.00950.93141.00120.97541.01491.05151.0013
TATA -0.0219-0.0265-0.0236-0.0152-0.0258-0.0118-0.0211-0.0323-0.0175-0.0626
M-score -1.95-2.47-2.55-2.67-2.67-2.35-2.61-2.57-2.61-3.02

Procter & Gamble Co Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 1.09341.09690.94430.98250.98910.99840.96340.85430.80490.8036
GMI 0.98950.9860.9931.00281.00971.01741.0131.01181.00871.0007
AQI 0.99430.98810.98450.98110.96280.93170.95920.92560.93490.9813
SGI 0.98380.97780.99270.97930.96320.98290.98130.98280.97580.9473
DEPI 1.09411.12311.07981.07921.00160.98010.96350.91940.90230.9218
SGAI 1.01951.023710.99190.9790.95410.9740.98310.98691.0054
LVGI 0.97331.01491.02721.02611.061.05151.0091.04951.0171.0013
TATA -0.0171-0.0326-0.0252-0.0195-0.0209-0.0175-0.0374-0.0465-0.0478-0.0626
M-score -2.48-2.57-2.67-2.61-2.65-2.61-2.72-2.89-2.94-3.02
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