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PPG Industries Inc (NYSE:PPG)
Beneish M-Score
-2.33 (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 -2.33 suggests that the company is not a manipulator.

PPG' s Beneish M-Score Range Over the Past 10 Years
Min: -3.09   Max: -2.01
Current: -2.33

-3.09
-2.01

During the past 13 years, the highest Beneish M-Score of PPG Industries Inc was -2.01. The lowest was -3.09. And the median was -2.56.


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 * 1.019+0.528 * 0.9853+0.404 * 1.309+0.892 * 1.0124+0.115 * 1.0234
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9769+4.679 * 0.0072-0.327 * 1.1172
=-2.33

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $3,062 Mil.
Revenue was 3872 + 4100 + 3662 + 3707 = $15,341 Mil.
Gross Profit was 1722 + 1817 + 1597 + 1542 = $6,678 Mil.
Total Current Assets was $7,292 Mil.
Total Assets was $17,574 Mil.
Property, Plant and Equipment(Net PPE) was $2,919 Mil.
Depreciation, Depletion and Amortization(DDA) was $493 Mil.
Selling, General & Admin. Expense(SGA) was $3,690 Mil.
Total Current Liabilities was $4,770 Mil.
Long-Term Debt was $4,250 Mil.
Net Income was 433 + 337 + 322 + 83 = $1,175 Mil.
Non Operating Income was 14 + -139 + 4 + -307 = $-428 Mil.
Cash Flow from Operations was 800 + 615 + -429 + 491 = $1,477 Mil.
Accounts Receivable was $2,968 Mil.
Revenue was 3935 + 4082 + 3636 + 3500 = $15,153 Mil.
Gross Profit was 1706 + 1776 + 1545 + 1472 = $6,499 Mil.
Total Current Assets was $8,898 Mil.
Total Assets was $17,087 Mil.
Property, Plant and Equipment(Net PPE) was $2,720 Mil.
Depreciation, Depletion and Amortization(DDA) was $472 Mil.
Selling, General & Admin. Expense(SGA) was $3,731 Mil.
Total Current Liabilities was $4,896 Mil.
Long-Term Debt was $2,954 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)
=(3062 / 15341) / (2968 / 15153)
=0.19959585 / 0.1958688
=1.019

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)
=(1817 / 15153) / (1722 / 15341)
=0.42889197 / 0.43530409
=0.9853

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 - (7292 + 2919) / 17574) / (1 - (8898 + 2720) / 17087)
=0.41897121 / 0.32006789
=1.309

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
=15341 / 15153
=1.0124

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))
=(472 / (472 + 2720)) / (493 / (493 + 2919))
=0.14786967 / 0.14449004
=1.0234

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)
=(3690 / 15341) / (3731 / 15153)
=0.24053191 / 0.24622187
=0.9769

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)
=((4250 + 4770) / 17574) / ((2954 + 4896) / 17087)
=0.51325822 / 0.45941359
=1.1172

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
=(1175 - -428 - 1477) / 17574
=0.0072

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 -2.33 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.98651.00950.85721.21370.96380.91870.99960.90330.89721.1807
GMI 1.01071.04621.00040.93550.98960.99520.93970.99470.97550.9729
AQI 1.06240.85341.53391.02340.90360.98870.96191.09541.19410
SGI 1.09231.23921.2970.77221.09671.10890.90781.05571.07680.998
DEPI 0.9831.04610.80711.12860.99661.01661.15140.93681.01810.1334
SGAI 1.03081.01691.14551.10780.92510.9791.091.03191.00121.1105
LVGI 0.97341.17091.06340.9511.09630.9880.97460.95981.01192.7554
TATA -0.0282-0.0192-0.0665-0.0768-0.0361-0.0237-0.04790.10160.04910.2315
M-score -2.51-2.44-2.51-2.86-2.66-2.57-2.82-2.01-2.21-2.34

PPG Industries Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.96320.90330.95930.89890.87880.89720.94391.00441.0191.1807
GMI 0.98030.99470.97370.96480.96740.97550.98180.9880.98530.9729
AQI 1.07881.09540.9530.89120.91331.19411.31031.30871.3090
SGI 1.01611.05571.11331.0991.08171.07681.04011.02751.01240.998
DEPI 0.96010.93680.97860.97570.94971.01811.06181.00441.02340.1334
SGAI 1.0431.03191.04691.0341.01831.00120.99630.9840.97691.0145
LVGI 0.9230.95981.00730.98580.98881.01191.09191.12311.11722.7554
TATA 0.06790.10160.01190.03390.04030.04910.02950.01340.00720.0809
M-score -2.15-2.01-2.41-2.39-2.39-2.21-2.26-2.31-2.33-3.03
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