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PPG Industries Inc (NYSE:PPG)
Beneish M-Score
-2.31 (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 -2.31 suggests that the company is not a manipulator.

PPG' s 10-Year Beneish M-Score Range
Min: -3.09   Max: -2.01
Current: -2.31

-3.09
-2.01

During the past 13 years, the highest Beneish M-Score of PPG Industries Inc was -2.01. The lowest was -3.09. And the median was -2.56.


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 * 1.0044+0.528 * 0.988+0.404 * 1.3087+0.892 * 1.0275+0.115 * 1.0044
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.984+4.679 * 0.0134-0.327 * 1.1231
=-2.31

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
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.
Net Income was 337 + 322 + 83 + 371 = $1,113 Mil.
Non Operating Income was -139 + 4 + -307 + 7 = $-435 Mil.
Cash Flow from Operations was 615 + -429 + 491 + 636 = $1,313 Mil.
Accounts Receivable was $3,184 Mil.
Revenue was 4082 + 3636 + 3500 + 3774 = $14,992 Mil.
Gross Profit was 1776 + 1545 + 1472 + 1613 = $6,406 Mil.
Total Current Assets was $9,035 Mil.
Total Assets was $17,300 Mil.
Property, Plant and Equipment(Net PPE) was $2,777 Mil.
Depreciation, Depletion and Amortization(DDA) was $466 Mil.
Selling, General & Admin. Expense(SGA) was $3,700 Mil.
Total Current Liabilities was $4,962 Mil.
Long-Term Debt was $2,958 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)
=(3286 / 15404) / (3184 / 14992)
=0.21332122 / 0.21237994
=1.0044

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)
=(1597 / 14992) / (1817 / 15404)
=0.42729456 / 0.43248507
=0.988

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 - (7374 + 2917) / 17596) / (1 - (9035 + 2777) / 17300)
=0.41515117 / 0.31722543
=1.3087

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
=15404 / 14992
=1.0275

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))
=(466 / (466 + 2777)) / (487 / (487 + 2917))
=0.14369411 / 0.14306698
=1.0044

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)
=(3741 / 15404) / (3700 / 14992)
=0.242859 / 0.24679829
=0.984

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)
=((4222 + 4825) / 17596) / ((2958 + 4962) / 17300)
=0.51415094 / 0.45780347
=1.1231

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
=(1113 - -435 - 1313) / 17596
=0.0134

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 -2.31 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.09710.98651.00950.85721.21370.96380.91870.99960.90330.8972
GMI 0.9721.01071.04621.00040.93550.98960.99520.93970.99470.9755
AQI 1.0081.06240.85341.53391.02340.90360.98870.96191.09541.1941
SGI 0.9491.09231.23921.2970.77221.09671.10890.90781.05571.0768
DEPI 0.97620.9831.04610.80711.12860.99661.01661.15140.93681.0181
SGAI 1.00031.03081.01691.14551.10780.92510.9791.091.03191.0012
LVGI 1.06310.97341.17091.06340.9511.09630.9880.97460.95981.0119
TATA -0.0294-0.0282-0.0192-0.0665-0.0768-0.0361-0.0237-0.04790.10160.0491
M-score -2.61-2.51-2.44-2.51-2.86-2.66-2.57-2.82-2.01-2.21

PPG Industries Inc Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 0.96451.01550.96320.90330.95930.89890.87880.89720.94391.0044
GMI 0.95760.96810.98030.99470.97370.96480.96740.97550.98180.988
AQI 0.98061.06621.07881.09540.9530.89120.91331.19411.31031.3087
SGI 0.90480.95891.01611.05571.11331.0991.08171.07681.04011.0275
DEPI 0.98070.99730.96010.93680.97860.97570.94971.01811.06181.0044
SGAI 1.05881.05361.0431.03191.04691.0341.01831.00120.99630.984
LVGI 0.90520.91390.9230.95981.00730.98580.98881.01191.09191.1231
TATA 0.08960.07590.06790.10160.01190.03390.04030.04910.02950.0134
M-score -2.19-2.12-2.15-2.01-2.41-2.39-2.39-2.21-2.26-2.31
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