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PPG Industries Inc (NYSE:PPG)
Beneish M-Score
-2.42 (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 -2.42 suggests that the company is not a manipulator.

PPG' s 10-Year Beneish M-Score Range
Min: -3.12   Max: -2.05
Current: -2.42

-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 * 0.8325+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
=-2.42

* 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

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)
=(2968 / 15996) / (3122 / 14008)
=0.18554639 / 0.22287264
=0.8325

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)
=(1776 / 14008) / (1706 / 15996)
=0.41490577 / 0.43885971
=0.9454

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 - (8898 + 2720) / 17087) / (1 - (8120 + 2687) / 16638)
=0.32006789 / 0.3504628
=0.9133

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
=15996 / 14008
=1.1419

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))
=0.14043506 / 0.15396579
=0.9121

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)
=0.24656164 / 0.24179041
=1.0197

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)
=0.45941359 / 0.46459911
=0.9888

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
=(2273 - 151 - 1546) / 17087
=0.0337

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.


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 0.99861.1050.99960.96451.01550.96320.85290.90750.85110.8325
GMI 0.98080.9610.93970.95760.96810.98030.96870.950.94240.9454
AQI 0.96740.95760.96190.98061.06621.07881.09540.9530.89120.9133
SGI 0.99090.93480.90780.90480.95891.01611.11811.17681.16081.1419
DEPI 1.0411.11041.15140.98070.99730.96010.89760.93970.93640.9121
SGAI 1.03821.06841.091.05881.05361.0431.03381.04841.03531.0197
LVGI 1.02960.99210.97460.90520.91390.9230.95981.00730.98580.9888
TATA -0.0228-0.0238-0.04790.08960.07590.06790.09450.00540.02750.0337
M-score -2.63-2.59-2.82-2.19-2.12-2.15-2.05-2.45-2.43-2.42
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