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PPG Industries Inc (NYSE:PPG)
Beneish M-Score
-2.64 (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 -2.64 suggests that the company is not a manipulator.

PPG' s Beneish M-Score Range Over the Past 10 Years
Min: -3.16   Max: -2.15
Current: -2.64

-3.16
-2.15

During the past 13 years, the highest Beneish M-Score of PPG Industries Inc was -2.15. The lowest was -3.16. 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 * 1.0521+0.528 * 0.9706+0.404 * 1.036+0.892 * 0.997+0.115 * 0.9874
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9799+4.679 * -0.0447-0.327 * 1.0015
=-2.64

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $3,106 Mil.
Revenue was 3672 + 3696 + 3872 + 4100 = $15,340 Mil.
Gross Profit was 1659 + 1603 + 1722 + 1817 = $6,801 Mil.
Total Current Assets was $6,718 Mil.
Total Assets was $17,315 Mil.
Property, Plant and Equipment(Net PPE) was $3,038 Mil.
Depreciation, Depletion and Amortization(DDA) was $496 Mil.
Selling, General & Admin. Expense(SGA) was $3,685 Mil.
Total Current Liabilities was $4,556 Mil.
Long-Term Debt was $4,226 Mil.
Net Income was 347 + 314 + 433 + 337 = $1,431 Mil.
Non Operating Income was -6 + 11 + 14 + -139 = $-120 Mil.
Cash Flow from Operations was 59 + 851 + 800 + 615 = $2,325 Mil.
Accounts Receivable was $2,961 Mil.
Revenue was 3662 + 3707 + 3935 + 4082 = $15,386 Mil.
Gross Profit was 1597 + 1542 + 1706 + 1776 = $6,621 Mil.
Total Current Assets was $7,084 Mil.
Total Assets was $17,368 Mil.
Property, Plant and Equipment(Net PPE) was $2,965 Mil.
Depreciation, Depletion and Amortization(DDA) was $477 Mil.
Selling, General & Admin. Expense(SGA) was $3,772 Mil.
Total Current Liabilities was $4,773 Mil.
Long-Term Debt was $4,023 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)
=(3106 / 15340) / (2961 / 15386)
=0.20247718 / 0.19244768
=1.0521

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)
=(1603 / 15386) / (1659 / 15340)
=0.43032627 / 0.44335072
=0.9706

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 - (6718 + 3038) / 17315) / (1 - (7084 + 2965) / 17368)
=0.4365579 / 0.42140719
=1.036

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
=15340 / 15386
=0.997

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))
=(477 / (477 + 2965)) / (496 / (496 + 3038))
=0.13858222 / 0.14035088
=0.9874

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)
=(3685 / 15340) / (3772 / 15386)
=0.24022164 / 0.24515794
=0.9799

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)
=((4226 + 4556) / 17315) / ((4023 + 4773) / 17368)
=0.5071903 / 0.50644864
=1.0015

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
=(1431 - -120 - 2325) / 17315
=-0.0447

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 -2.64 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 0.98651.00950.85721.21370.96380.91870.97340.87590.95031.0219
GMI 1.01071.04621.00040.93550.98960.99520.96670.94161.00170.9729
AQI 1.06240.85341.53391.02340.90360.98870.96191.09541.19411.0114
SGI 1.09231.23921.2970.77221.09671.10891.02120.99391.01670.998
DEPI 0.9831.04610.80711.12860.99661.01661.05630.97841.06250.9465
SGAI 1.03081.01691.14551.10780.92510.9791.00991.11590.99930.9809
LVGI 0.97341.17091.06340.9511.09630.9880.97460.95981.01191.0637
TATA -0.0282-0.0192-0.0665-0.0768-0.0425-0.0301-0.05330.09450.0491-0.0187
M-score -2.51-2.44-2.51-2.86-2.69-2.60-2.75-2.16-2.20-2.58

PPG Industries Inc Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.87591.02410.9570.9320.95030.98351.03181.03261.02191.0521
GMI 0.94160.94210.95220.97451.00171.00010.99950.99060.97290.9706
AQI 1.09540.9530.89120.91331.19411.31031.30871.3091.01141.036
SGI 0.99391.04291.03221.021.01670.99821.00030.99910.9980.997
DEPI 0.97841.02691.01890.99061.06251.09441.02641.03450.94650.9874
SGAI 1.11591.11111.07151.03340.99930.99390.98270.97630.98120.9799
LVGI 0.95981.00730.98580.98881.01191.09191.12311.11721.06371.0015
TATA 0.09450.00550.02770.03390.04910.02950.01340.0072-0.0188-0.0447
M-score -2.16-2.46-2.44-2.42-2.20-2.25-2.30-2.33-2.58-2.64
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