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Procter & Gamble Co (NYSE:PG)
Beneish M-Score
-2.64 (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 -2.64 suggests that the company is not a manipulator.

PG' s 10-Year Beneish M-Score Range
Min: -3.16   Max: -1.92
Current: -2.64

-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 -2.63.


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 * 0.9417+0.528 * 1.0202+0.404 * 0.9628+0.892 * 1.0116+0.115 * 1.0016
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9685+4.679 * -0.0209-0.327 * 1.06
=-2.64

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $6,353 Mil.
Revenue was 20559 + 22280 + 21205 + 20655 = $84,699 Mil.
Gross Profit was 9958 + 11150 + 10395 + 9801 = $41,304 Mil.
Total Current Assets was $28,126 Mil.
Total Assets was $143,197 Mil.
Property, Plant and Equipment(Net PPE) was $22,274 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,111 Mil.
Selling, General & Admin. Expense(SGA) was $26,202 Mil.
Total Current Liabilities was $32,118 Mil.
Long-Term Debt was $20,837 Mil.
Net Income was 2609 + 3428 + 3027 + 1875 = $10,939 Mil.
Non Operating Income was 20 + 43 + 5 + 13 = $81 Mil.
Cash Flow from Operations was 4109 + 3299 + 2044 + 4392 = $13,844 Mil.
Accounts Receivable was $6,669 Mil.
Revenue was 20598 + 22175 + 20739 + 20212 = $83,724 Mil.
Gross Profit was 10254 + 11295 + 10389 + 9715 = $41,653 Mil.
Total Current Assets was $24,298 Mil.
Total Assets was $139,131 Mil.
Property, Plant and Equipment(Net PPE) was $21,191 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,965 Mil.
Selling, General & Admin. Expense(SGA) was $26,742 Mil.
Total Current Liabilities was $27,412 Mil.
Long-Term Debt was $21,125 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)
=(6353 / 84699) / (6669 / 83724)
=0.07500679 / 0.07965458
=0.9417

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)
=(11150 / 83724) / (9958 / 84699)
=0.4975037 / 0.48765629
=1.0202

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 - (28126 + 22274) / 143197) / (1 - (24298 + 21191) / 139131)
=0.64803732 / 0.67304914
=0.9628

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
=84699 / 83724
=1.0116

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))
=(2965 / (2965 + 21191)) / (3111 / (3111 + 22274))
=0.12274383 / 0.12255269
=1.0016

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)
=(26202 / 84699) / (26742 / 83724)
=0.3093543 / 0.31940662
=0.9685

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)
=((20837 + 32118) / 143197) / ((21125 + 27412) / 139131)
=0.36980523 / 0.34885827
=1.06

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
=(10939 - 81 - 13844) / 143197
=-0.0209

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 -2.64 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

Jun04Jun05Jun06Jun07Jun08Jun09Jun10Jun11Jun12Jun13
DSRI 1.12820.93341.13781.03290.95410.92010.88821.14480.93721.0663
GMI 0.95821.00420.9890.98881.00761.04210.95361.02181.03070.995
AQI 1.28630.96461.56281.00281.00311.00991.01460.97720.98970.9881
SGI 1.18511.10381.20231.1211.06890.93821.02931.02741.03181.0058
DEPI 1.05130.94160.94630.88921.03820.97280.98321.18230.86561.1231
SGAI 1.06440.98750.98760.99380.9830.94321.07321.00260.99451.0141
LVGI 1.11551.01340.6690.95040.96641.00950.93141.00120.97541.0149
TATA -0.0587-0.0342-0.0219-0.0265-0.0236-0.0139-0.0258-0.0135-0.0205-0.0323
M-score -2.42-2.63-1.95-2.47-2.55-2.64-2.69-2.36-2.60-2.57

Procter & Gamble Co Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 1.0030.9470.94541.06641.0441.07821.06630.9180.9460.9417
GMI 1.02991.03191.02841.01681.00330.99380.9951.00171.01111.0202
AQI 0.97590.98110.98970.98540.98990.99430.98810.98450.98110.9628
SGI 1.05081.04521.02280.9960.99640.99771.00581.0211.0171.0116
DEPI 1.04440.91730.86560.92710.94961.09411.12311.07981.07921.0016
SGAI 0.99480.99280.99851.00291.01341.01111.01410.99320.98410.9685
LVGI 1.01011.02220.97540.96780.97520.97331.01491.02721.02611.06
TATA -0.0282-0.0294-0.0205-0.0261-0.0172-0.0163-0.0323-0.0251-0.0195-0.0209
M-score -2.56-2.63-2.60-2.54-2.53-2.47-2.57-2.66-2.60-2.64
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