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PPG Industries Inc (NYSE:PPG)
Beneish M-Score
-2.60 (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 -2.60 suggests that the company is not a manipulator.

PPG' s Beneish M-Score Range Over the Past 10 Years
Min: -3.16   Max: -2.02
Current: -2.6

-3.16
-2.02

During the past 13 years, the highest Beneish M-Score of PPG Industries Inc was -2.02. 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 * 0.952+0.528 * 0.9651+0.404 * 1.0043+0.892 * 0.9935+0.115 * 1.0009
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.992+4.679 * -0.0116-0.327 * 0.9924
=-2.60

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $3,108 Mil.
Revenue was 4064 + 3672 + 3696 + 3872 = $15,304 Mil.
Gross Profit was 1874 + 1659 + 1603 + 1722 = $6,858 Mil.
Total Current Assets was $7,107 Mil.
Total Assets was $17,248 Mil.
Property, Plant and Equipment(Net PPE) was $2,950 Mil.
Depreciation, Depletion and Amortization(DDA) was $492 Mil.
Selling, General & Admin. Expense(SGA) was $3,687 Mil.
Total Current Liabilities was $4,375 Mil.
Long-Term Debt was $4,426 Mil.
Net Income was 370 + 347 + 314 + 433 = $1,464 Mil.
Non Operating Income was 19 + -6 + 11 + 14 = $38 Mil.
Cash Flow from Operations was -84 + 59 + 851 + 800 = $1,626 Mil.
Accounts Receivable was $3,286 Mil.
Revenue was 4100 + 3662 + 3707 + 3935 = $15,404 Mil.
Gross Profit was 1817 + 1597 + 1542 + 1706 = $6,662 Mil.
Total Current Assets was $7,374 Mil.
Total Assets was $17,596 Mil.
Property, Plant and Equipment(Net PPE) was $2,917 Mil.
Depreciation, Depletion and Amortization(DDA) was $487 Mil.
Selling, General & Admin. Expense(SGA) was $3,741 Mil.
Total Current Liabilities was $4,825 Mil.
Long-Term Debt was $4,222 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)
=(3108 / 15304) / (3286 / 15404)
=0.20308416 / 0.21332122
=0.952

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)
=(6662 / 15404) / (6858 / 15304)
=0.43248507 / 0.44811814
=0.9651

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 - (7107 + 2950) / 17248) / (1 - (7374 + 2917) / 17596)
=0.4169179 / 0.41515117
=1.0043

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
=15304 / 15404
=0.9935

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))
=(487 / (487 + 2917)) / (492 / (492 + 2950))
=0.14306698 / 0.14294015
=1.0009

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)
=(3687 / 15304) / (3741 / 15404)
=0.24091741 / 0.242859
=0.992

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)
=((4426 + 4375) / 17248) / ((4222 + 4825) / 17596)
=0.51026206 / 0.51415094
=0.9924

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
=(1464 - 38 - 1626) / 17248
=-0.0116

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 -2.60 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 0.98651.00950.85721.21370.96381.03960.94080.84810.89721.0219
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 -2.51-2.44-2.51-2.86-2.66-2.62-2.73-2.02-2.19-2.60

PPG Industries Inc Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.89960.84450.8270.89720.94391.00441.0191.02191.05210.952
GMI 0.93950.9320.9360.97550.98180.9880.98530.97290.97060.9651
AQI 0.9530.89120.91331.25361.31031.30871.3090.96331.0361.0043
SGI 1.18711.16981.14951.07681.04011.02751.01240.9980.9970.9935
DEPI 0.93370.93250.90851.01811.06181.00441.02340.94650.98741.0009
SGAI 1.05371.03941.02261.00120.99630.9840.97690.98120.97990.992
LVGI 1.00730.98580.98881.01321.09191.12311.11721.06231.00150.9924
TATA 0.01190.03390.04030.04930.02950.01340.0072-0.0188-0.0447-0.0116
M-score -2.42-2.40-2.40-2.19-2.26-2.31-2.33-2.60-2.64-2.60
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