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Procter & Gamble Co (NYSE:PG)
Beneish M-Score
-2.60 (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 -2.60 suggests that the company is not a manipulator.

PG' s 10-Year Beneish M-Score Range
Min: -3.16   Max: -1.92
Current: -2.6

-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 * 0.946+0.528 * 1.0111+0.404 * 0.9811+0.892 * 1.017+0.115 * 1.0792
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9841+4.679 * -0.0192-0.327 * 1.0261
=-2.60

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $6,911 Mil.
Revenue was 22280 + 21205 + 20655 + 20598 = $84,738 Mil.
Gross Profit was 11150 + 10395 + 9801 + 10254 = $41,600 Mil.
Total Current Assets was $27,467 Mil.
Total Assets was $142,927 Mil.
Property, Plant and Equipment(Net PPE) was $22,152 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,060 Mil.
Selling, General & Admin. Expense(SGA) was $26,551 Mil.
Total Current Liabilities was $30,727 Mil.
Long-Term Debt was $21,517 Mil.
Net Income was 3428 + 3027 + 1875 + 2566 = $10,896 Mil.
Non Operating Income was 43 + 5 + -46 + 46 = $48 Mil.
Cash Flow from Operations was 3299 + 2044 + 4392 + 3862 = $13,597 Mil.
Accounts Receivable was $7,183 Mil.
Revenue was 22175 + 20739 + 20212 + 20194 = $83,320 Mil.
Gross Profit was 11295 + 10389 + 9715 + 9957 = $41,356 Mil.
Total Current Assets was $25,601 Mil.
Total Assets was $139,903 Mil.
Property, Plant and Equipment(Net PPE) was $21,204 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,196 Mil.
Selling, General & Admin. Expense(SGA) was $26,529 Mil.
Total Current Liabilities was $26,230 Mil.
Long-Term Debt was $23,607 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)
=(6911 / 84738) / (7183 / 83320)
=0.08155727 / 0.08620979
=0.946

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)
=(10395 / 83320) / (11150 / 84738)
=0.49635142 / 0.49092497
=1.0111

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 - (27467 + 22152) / 142927) / (1 - (25601 + 21204) / 139903)
=0.65283676 / 0.66544677
=0.9811

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
=84738 / 83320
=1.017

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))
=(3196 / (3196 + 21204)) / (3060 / (3060 + 22152))
=0.13098361 / 0.12137078
=1.0792

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)
=(26551 / 84738) / (26529 / 83320)
=0.3133305 / 0.31839894
=0.9841

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)
=((21517 + 30727) / 142927) / ((23607 + 26230) / 139903)
=0.36552926 / 0.35622538
=1.0261

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
=(10896 - 48 - 13597) / 142927
=-0.0192

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 -2.60 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

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.03091.0030.9470.94541.06641.0441.07821.06630.9180.946
GMI 1.03091.02991.03191.02841.01681.00330.99380.9951.00171.0111
AQI 0.97240.97590.98110.98970.98540.98990.99430.98810.98450.9811
SGI 1.05011.05081.04521.02280.9960.99640.99771.00581.0211.017
DEPI 1.08081.04440.91730.86560.92710.94961.09411.12311.07981.0792
SGAI 1.00740.99480.99280.99851.00291.01341.01111.01410.99320.9841
LVGI 1.00321.01011.02220.97540.96780.97520.97331.01491.02721.0261
TATA -0.0118-0.0282-0.0294-0.0205-0.0261-0.0172-0.0164-0.0321-0.0248-0.0192
M-score -2.45-2.56-2.63-2.60-2.54-2.53-2.47-2.56-2.66-2.60
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