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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: -3.1   Max: -2.15
Current: -2.42

-3.1
-2.15

During the past 13 years, the highest Beneish M-Score of PPG Industries Inc was -2.15. The lowest was -3.10. 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 * 0.932+0.528 * 0.9745+0.404 * 0.9133+0.892 * 1.02+0.115 * 0.9906
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0334+4.679 * 0.0339-0.327 * 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 + 3702 = $15,355 Mil.
Gross Profit was 1706 + 1776 + 1545 + 1594 = $6,621 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 $478 Mil.
Selling, General & Admin. Expense(SGA) was $3,783 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 + 131 = $148 Mil.
Cash Flow from Operations was 636 + 238 + 163 + 509 = $1,546 Mil.
Accounts Receivable was $3,122 Mil.
Revenue was 3980 + 4095 + 3331 + 3648 = $15,054 Mil.
Gross Profit was 1742 + 1752 + 1384 + 1448 = $6,326 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 $467 Mil.
Selling, General & Admin. Expense(SGA) was $3,589 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 / 15355) / (3122 / 15054)
=0.19329209 / 0.20738674
=0.932

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 / 15054) / (1706 / 15355)
=0.42022054 / 0.43119505
=0.9745

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
=15355 / 15054
=1.02

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))
=(467 / (467 + 2687)) / (478 / (478 + 2720))
=0.14806595 / 0.14946842
=0.9906

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)
=(3783 / 15355) / (3589 / 15054)
=0.24636926 / 0.2384084
=1.0334

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 - 148 - 1546) / 17087
=0.0339

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 1.01410.9710.97611.19530.82681.21370.96380.91870.97340.8759
GMI 1.00021.01081.00810.98621.02310.93550.98960.99520.96670.9416
AQI 0.97811.0081.07750.82971.55541.02340.90360.98870.96191.0954
SGI 1.08651.07231.0821.01531.41430.77221.09671.10891.02120.9939
DEPI 0.98080.97621.05210.97570.80851.12860.99661.01661.05630.9784
SGAI 1.00030.9631.03331.06251.1361.10780.92510.9791.00991.1159
LVGI 0.92331.06310.97071.181.05810.9511.09630.9880.97460.9598
TATA -0.0412-0.0255-0.0261-0.0188-0.0611-0.0768-0.0425-0.0301-0.05330.0945
M-score -2.57-2.57-2.51-2.52-2.38-2.86-2.69-2.60-2.75-2.16

PPG Industries Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.94261.0110.97340.89190.98380.97970.87591.02410.9570.932
GMI 0.99070.9790.96670.96690.95980.950.94160.94210.95220.9745
AQI 0.96740.95760.96190.98061.06621.07881.09540.9530.89120.9133
SGI 1.04981.02181.02120.97850.98980.9990.99391.04291.03221.02
DEPI 1.40031.63861.05630.92370.97240.97050.97841.02691.01890.9906
SGAI 0.99731.00621.00991.01981.05991.0921.11591.11111.07151.0334
LVGI 1.02960.99210.97460.90520.91390.9230.95981.00730.98580.9888
TATA -0.0432-0.0432-0.06640.0840.07050.06270.09450.00550.02770.0339
M-score -2.67-2.61-2.82-2.21-2.15-2.19-2.16-2.46-2.44-2.42
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