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Procter & Gamble Co (NYSE:PG)
Beneish M-Score
-2.82 (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 -2.82 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: -2.82

-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 * 1.0729+0.528 * 0.9875+0.404 * 0.9579+0.892 * 0.8576+0.115 * 0.991
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9337+4.679 * -0.0524-0.327 * 1.0529
=-2.82

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $4,591 Mil.
Revenue was 15755 + 16915 + 16527 + 17790 = $66,987 Mil.
Gross Profit was 7840 + 8455 + 8375 + 8533 = $33,203 Mil.
Total Current Assets was $34,317 Mil.
Total Assets was $127,508 Mil.
Property, Plant and Equipment(Net PPE) was $19,186 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,047 Mil.
Selling, General & Admin. Expense(SGA) was $19,306 Mil.
Total Current Liabilities was $31,357 Mil.
Long-Term Debt was $19,134 Mil.
Net Income was 2750 + 3206 + 2601 + 521 = $9,078 Mil.
Non Operating Income was 21 + 35 + -18 + 438 = $476 Mil.
Cash Flow from Operations was 3278 + 4480 + 3538 + 3988 = $15,284 Mil.
Accounts Receivable was $4,990 Mil.
Revenue was 18142 + 20161 + 20792 + 19018 = $78,113 Mil.
Gross Profit was 8815 + 10078 + 10240 + 9099 = $38,232 Mil.
Total Current Assets was $31,562 Mil.
Total Assets was $130,937 Mil.
Property, Plant and Equipment(Net PPE) was $20,043 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,150 Mil.
Selling, General & Admin. Expense(SGA) was $24,110 Mil.
Total Current Liabilities was $31,881 Mil.
Long-Term Debt was $17,364 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)
=(4591 / 66987) / (4990 / 78113)
=0.06853569 / 0.06388181
=1.0729

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)
=(38232 / 78113) / (33203 / 66987)
=0.48944478 / 0.49566334
=0.9875

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 - (34317 + 19186) / 127508) / (1 - (31562 + 20043) / 130937)
=0.58039496 / 0.60587916
=0.9579

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
=66987 / 78113
=0.8576

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))
=(3150 / (3150 + 20043)) / (3047 / (3047 + 19186))
=0.13581684 / 0.13704853
=0.991

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)
=(19306 / 66987) / (24110 / 78113)
=0.28820517 / 0.30865541
=0.9337

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)
=((19134 + 31357) / 127508) / ((17364 + 31881) / 130937)
=0.395983 / 0.3760969
=1.0529

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
=(9078 - 476 - 15284) / 127508
=-0.0524

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 -2.82 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 1.13781.03290.93410.91210.91521.12460.95411.06630.99430.8289
GMI 0.99130.98881.01491.00960.97721.02661.02590.9951.01450.9969
AQI 1.56281.00281.00311.00991.01460.97720.98970.98810.93170.9813
SGI 1.20231.1211.09190.94640.99881.04591.01361.00580.98690.9183
DEPI 0.94630.88921.03820.97280.98321.18230.86561.12310.98010.9218
SGAI 1.0090.99380.9680.98611.04240.99341.00361.01410.95181.0145
LVGI 0.6690.95040.96641.00950.93141.00120.97541.01491.05151.0013
TATA -0.0219-0.0265-0.0292-0.0152-0.0258-0.0118-0.0211-0.0323-0.0175-0.0626
M-score -1.95-2.47-2.57-2.67-2.67-2.35-2.61-2.57-2.61-3.02

Procter & Gamble Co Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.9460.94170.99430.96810.88340.85170.82240.86760.94451.0729
GMI 1.01111.02021.01451.00791.0040.99630.99780.99270.99250.9875
AQI 0.98110.96280.93170.95920.92560.93490.98130.91330.94680.9579
SGI 1.0171.01160.98690.97660.95030.92220.92560.87870.86150.8576
DEPI 1.07921.00160.98010.96350.91940.90230.92180.91430.9510.991
SGAI 0.98410.96850.95180.9720.9880.99771.0120.98560.95290.9337
LVGI 1.02611.061.05151.0091.04951.0171.00131.02471.00211.0529
TATA -0.0192-0.0204-0.0175-0.0374-0.0465-0.0478-0.0626-0.0569-0.0587-0.0524
M-score -2.60-2.64-2.61-2.72-2.90-2.95-3.02-3.03-2.95-2.82
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