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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.
PPG Industries, Inc. has a M-score of -2.09 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of PPG Industries, Inc. was -2.09. The lowest was -2.89. And the median was -2.59.
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 PPG Industries, Inc. 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 * 0.8699||+||0.528 * 0.9687||+||0.404 * 1.0954||+||0.892 * 1.1181||+||0.115 * 0.8976|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0338||+||4.679 * 0.0832||-||0.327 * 0.9598|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $2,736 Mil.|
Revenue was 3702 + 3980 + 4095 + 3331 = $15,108 Mil.
Gross Profit was 1594 + 1742 + 1752 + 1384 = $6,472 Mil.
Total Current Assets was $7,214 Mil.
Total Assets was $15,863 Mil.
Property, Plant and Equipment(Net PPE) was $2,876 Mil.
Depreciation, Depletion and Amortization(DDA) was $475 Mil.
Selling, General & Admin. Expense(SGA) was $3,699 Mil.
Total Current Liabilities was $4,135 Mil.
Long-Term Debt was $3,372 Mil.
Net Income was 254 + 226 + 341 + 2410 = $3,231 Mil.
Non Operating Income was 310 + -190 + 4 + -4 = $120 Mil.
Cash Flow from Operations was 509 + 788 + 583 + -89 = $1,791 Mil.
|Accounts Receivable was $2,813 Mil.
Revenue was 3243 + 3408 + 3528 + 3333 = $13,512 Mil.
Gross Profit was 1333 + 1425 + 1462 + 1387 = $5,607 Mil.
Total Current Assets was $7,715 Mil.
Total Assets was $15,878 Mil.
Property, Plant and Equipment(Net PPE) was $2,888 Mil.
Depreciation, Depletion and Amortization(DDA) was $421 Mil.
Selling, General & Admin. Expense(SGA) was $3,200 Mil.
Total Current Liabilities was $4,461 Mil.
Long-Term Debt was $3,368 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)|
|=||(2736 / 15108)||/||(2813 / 13512)|
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)|
|=||(1742 / 13512)||/||(1594 / 15108)|
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 - (7214 + 2876) / 15863)||/||(1 - (7715 + 2888) / 15878)|
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))|
|=||(421 / (421 + 2888))||/||(475 / (475 + 2876))|
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)|
|=||(3699 / 15108)||/||(3200 / 13512)|
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)|
|=||((3372 + 4135) / 15863)||/||((3368 + 4461) / 15878)|
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|
|=||(3231 - 120||-||1791)||/||15863|
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.
PPG Industries, Inc. has a M-score of -2.09 signals that the company is likely to 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
PPG Industries, Inc. Annual Data
PPG Industries, Inc. Quarterly Data