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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 -2.42 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of PPG Industries Inc was -2.05. The lowest was -3.10. And the median was -2.57.
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 * 0.8325||+||0.528 * 0.9454||+||0.404 * 0.9133||+||0.892 * 1.1419||+||0.115 * 0.9121|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0197||+||4.679 * 0.0337||-||0.327 * 0.9888|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $2,968 Mil.|
Revenue was 3935 + 4082 + 3636 + 4343 = $15,996 Mil.
Gross Profit was 1706 + 1776 + 1545 + 1993 = $7,020 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 $495 Mil.
Selling, General & Admin. Expense(SGA) was $3,944 Mil.
Total Current Liabilities was $4,896 Mil.
Long-Term Debt was $2,954 Mil.
Net Income was 371 + 386 + 1262 + 254 = $2,273 Mil.
Non Operating Income was 7 + 9 + 1 + 134 = $151 Mil.
Cash Flow from Operations was 636 + 238 + 163 + 509 = $1,546 Mil.
|Accounts Receivable was $3,122 Mil.
Revenue was 3774 + 3883 + 3108 + 3243 = $14,008 Mil.
Gross Profit was 1613 + 1620 + 1246 + 1333 = $5,812 Mil.
Total Current Assets was $8,120 Mil.
Total Assets was $16,638 Mil.
Property, Plant and Equipment(Net PPE) was $2,687 Mil.
Depreciation, Depletion and Amortization(DDA) was $439 Mil.
Selling, General & Admin. Expense(SGA) was $3,387 Mil.
Total Current Liabilities was $4,362 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)|
|=||(2968 / 15996)||/||(3122 / 14008)|
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)|
|=||(1776 / 14008)||/||(1706 / 15996)|
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 - (8898 + 2720) / 17087)||/||(1 - (8120 + 2687) / 16638)|
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))|
|=||(439 / (439 + 2687))||/||(495 / (495 + 2720))|
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)|
|=||(3944 / 15996)||/||(3387 / 14008)|
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)|
|=||((2954 + 4896) / 17087)||/||((3368 + 4362) / 16638)|
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|
|=||(2273 - 151||-||1546)||/||17087|
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 -2.42 suggests that the company will not 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