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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.
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.
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|
|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
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)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(9099 / 82672)||/||(10240 / 82649)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|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)|
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.
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))|
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)|
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)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(10606 - 222||-||15547)||/||138183|
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.
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
Procter & Gamble Co Annual Data
Procter & Gamble Co Quarterly Data