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PPG Industries Inc (NYSE:PPG)
Beneish M-Score
-2.45 (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 -2.45 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: -2.45

-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 * 0.9397+0.528 * 0.9788+0.404 * 1.0436+0.892 * 1.0294+0.115 * 0.9544
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9881+4.679 * 0.0105-0.327 * 0.9703
=-2.45

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $2,962 Mil.
Revenue was 3789 + 4064 + 3672 + 4116 = $15,641 Mil.
Gross Profit was 1708 + 1874 + 1659 + 1734 = $6,975 Mil.
Total Current Assets was $6,417 Mil.
Total Assets was $16,490 Mil.
Property, Plant and Equipment(Net PPE) was $2,863 Mil.
Depreciation, Depletion and Amortization(DDA) was $492 Mil.
Selling, General & Admin. Expense(SGA) was $3,738 Mil.
Total Current Liabilities was $4,460 Mil.
Long-Term Debt was $3,752 Mil.
Net Income was -184 + 370 + 347 + 314 = $847 Mil.
Non Operating Income was -958 + 19 + -6 + 17 = $-928 Mil.
Cash Flow from Operations was 776 + -84 + 59 + 851 = $1,602 Mil.
Accounts Receivable was $3,062 Mil.
Revenue was 3725 + 4100 + 3662 + 3707 = $15,194 Mil.
Gross Profit was 1676 + 1817 + 1597 + 1542 = $6,632 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 $475 Mil.
Selling, General & Admin. Expense(SGA) was $3,675 Mil.
Total Current Liabilities was $4,770 Mil.
Long-Term Debt was $4,250 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)
=(2962 / 15641) / (3062 / 15194)
=0.18937408 / 0.20152692
=0.9397

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)
=(6632 / 15194) / (6975 / 15641)
=0.43648809 / 0.44594335
=0.9788

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 - (6417 + 2863) / 16490) / (1 - (7292 + 2919) / 17574)
=0.43723469 / 0.41897121
=1.0436

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
=15641 / 15194
=1.0294

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))
=(475 / (475 + 2919)) / (492 / (492 + 2863))
=0.13995286 / 0.1466468
=0.9544

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)
=(3738 / 15641) / (3675 / 15194)
=0.23898728 / 0.24187179
=0.9881

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)
=((3752 + 4460) / 16490) / ((4250 + 4770) / 17574)
=0.49799879 / 0.51325822
=0.9703

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
=(847 - -928 - 1602) / 16490
=0.0105

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 -2.45 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 local exchange's currency.

PPG Industries Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.98651.00950.85721.21370.96381.03960.94080.84810.89721.1807
GMI 1.01071.04621.00040.93550.98960.96521.00260.96120.97550.9729
AQI 1.06240.85341.53391.02340.90360.98870.96191.09541.25360.9633
SGI 1.09231.23921.2970.77221.09670.97990.96451.12451.07680.998
DEPI 0.9831.04610.80711.12860.99661.10241.11290.89381.01810.9465
SGAI 1.03081.01691.14551.10780.92511.06950.9921.03791.00120.9809
LVGI 0.97341.17091.06340.9511.09630.9880.97460.95981.01321.0623
TATA -0.0282-0.0192-0.0665-0.0768-0.0361-0.0299-0.03610.10160.0493-0.0187
M-score -2.51-2.44-2.51-2.86-2.66-2.62-2.73-2.02-2.19-2.46

PPG Industries Inc Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 0.84450.8270.89720.94391.00441.02891.161.03370.93530.9397
GMI 0.9320.9360.97550.98180.9880.98260.97790.97570.97030.9788
AQI 0.89120.91331.25361.31031.30871.3090.96331.0361.00431.0436
SGI 1.16981.14951.07681.04011.02751.00271.01581.01481.01121.0294
DEPI 0.93250.90851.01811.06181.00441.05660.94650.98741.00090.9544
SGAI 1.03941.02261.00120.99630.9840.98230.97110.96980.98180.9881
LVGI 0.98580.98881.01321.09191.12311.11721.06231.00150.99240.9703
TATA 0.03390.04030.04930.02950.01340.0073-0.019-0.0449-0.01180.0105
M-score -2.40-2.40-2.19-2.26-2.31-2.33-2.46-2.64-2.59-2.45
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