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PPG Industries Inc (NYSE:PPG)
Beneish M-Score
-2.44 (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.

PPG Industries Inc has a M-score of -2.44 suggests that the company is not a manipulator.

PPG' s 10-Year Beneish M-Score Range
Min: -3.12   Max: -2.05
Current: -2.44

-3.12
-2.05

During the past 13 years, the highest Beneish M-Score of PPG Industries Inc was -2.05. The lowest was -3.12. And the median was -2.57.


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 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 * 0.8751+0.528 * 0.9537+0.404 * 0.8912+0.892 * 1.1289+0.115 * 0.9364
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1024+4.679 * 0.0277-0.327 * 0.9858
=-2.44

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $3,184 Mil.
Revenue was 4082 + 3636 + 3702 + 3980 = $15,400 Mil.
Gross Profit was 1776 + 1545 + 1594 + 1742 = $6,657 Mil.
Total Current Assets was $9,035 Mil.
Total Assets was $17,300 Mil.
Property, Plant and Equipment(Net PPE) was $2,777 Mil.
Depreciation, Depletion and Amortization(DDA) was $489 Mil.
Selling, General & Admin. Expense(SGA) was $4,052 Mil.
Total Current Liabilities was $4,962 Mil.
Long-Term Debt was $2,958 Mil.
Net Income was 386 + 1262 + 254 + 226 = $2,128 Mil.
Non Operating Income was 9 + 1 + 131 + -190 = $-49 Mil.
Cash Flow from Operations was 238 + 163 + 509 + 788 = $1,698 Mil.
Accounts Receivable was $3,223 Mil.
Revenue was 3883 + 3108 + 3243 + 3408 = $13,642 Mil.
Gross Profit was 1620 + 1246 + 1333 + 1425 = $5,624 Mil.
Total Current Assets was $7,710 Mil.
Total Assets was $16,066 Mil.
Property, Plant and Equipment(Net PPE) was $2,637 Mil.
Depreciation, Depletion and Amortization(DDA) was $430 Mil.
Selling, General & Admin. Expense(SGA) was $3,256 Mil.
Total Current Liabilities was $4,106 Mil.
Long-Term Debt was $3,355 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)
=(3184 / 15400) / (3223 / 13642)
=0.20675325 / 0.23625568
=0.8751

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)
=(1545 / 13642) / (1776 / 15400)
=0.41225627 / 0.43227273
=0.9537

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 - (9035 + 2777) / 17300) / (1 - (7710 + 2637) / 16066)
=0.31722543 / 0.35596913
=0.8912

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
=15400 / 13642
=1.1289

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))
=(430 / (430 + 2637)) / (489 / (489 + 2777))
=0.14020215 / 0.14972443
=0.9364

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)
=(4052 / 15400) / (3256 / 13642)
=0.26311688 / 0.23867468
=1.1024

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)
=((2958 + 4962) / 17300) / ((3355 + 4106) / 16066)
=0.45780347 / 0.46439686
=0.9858

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
=(2128 - -49 - 1698) / 17300
=0.0277

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 -2.44 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.

PPG Industries Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.01411.09710.98651.00950.85721.21370.96380.91870.99960.8529
GMI 1.00020.9721.01071.04621.00040.93550.98960.99520.93970.9687
AQI 0.97811.0081.06240.85341.53391.02340.90360.98870.96191.0954
SGI 1.08650.9491.09231.23921.2970.77221.09671.10890.90781.1181
DEPI 0.98080.97620.9831.04610.80711.12860.99661.01661.15140.8976
SGAI 1.00031.00031.03081.01691.14551.10780.92510.9791.091.0338
LVGI 0.92331.06310.97341.17091.06340.9511.09630.9880.97460.9598
TATA -0.0425-0.0294-0.0282-0.0192-0.0665-0.0768-0.0361-0.0237-0.04790.0945
M-score -2.57-2.61-2.51-2.44-2.51-2.86-2.66-2.57-2.82-2.05

PPG Industries Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.99861.1050.99960.96451.01550.94920.87820.93350.8751
GMI 0.98080.9610.93970.95760.96810.97310.98170.96190.9537
AQI 0.96740.95760.96190.98061.06621.07881.09540.9530.8912
SGI 0.99090.93480.90780.90480.95891.0311.08591.14411.1289
DEPI 1.0411.11041.15140.98070.99730.92940.89760.93970.9364
SGAI 1.03821.06841.091.05881.05361.04421.03371.0821.1024
LVGI 1.02960.99210.97460.90520.91390.9230.95981.00730.9858
TATA -0.0228-0.0238-0.04790.08960.07590.06790.09470.00560.0277
M-score -2.63-2.59-2.82-2.19-2.12-2.15-2.05-2.45-2.44
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