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PPG Industries Inc (NYSE:PPG)
Beneish M-Score
-2.09 (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 -2.09 signals that the company is a manipulator.

PPG' s 10-Year Beneish M-Score Range
Min: -2.89   Max: -2.09
Current: -2.09

-2.89
-2.09

During the past 13 years, the highest Beneish M-Score of PPG Industries Inc was -2.09. The lowest was -2.89. And the median was -2.59.


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 * 0.8699+0.528 * 0.9687+0.404 * 1.0954+0.892 * 1.1181+0.115 * 0.8976
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0338+4.679 * 0.0832-0.327 * 0.9598
=-2.09

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $2,736 Mil.
Revenue was 3702 + 3980 + 4095 + 3331 = $15,108 Mil.
Gross Profit was 1594 + 1742 + 1752 + 1384 = $6,472 Mil.
Total Current Assets was $7,214 Mil.
Total Assets was $15,863 Mil.
Property, Plant and Equipment(Net PPE) was $2,876 Mil.
Depreciation, Depletion and Amortization(DDA) was $475 Mil.
Selling, General & Admin. Expense(SGA) was $3,699 Mil.
Total Current Liabilities was $4,135 Mil.
Long-Term Debt was $3,372 Mil.
Net Income was 254 + 226 + 341 + 2410 = $3,231 Mil.
Non Operating Income was 310 + -190 + 4 + -4 = $120 Mil.
Cash Flow from Operations was 509 + 788 + 583 + -89 = $1,791 Mil.
Accounts Receivable was $2,813 Mil.
Revenue was 3243 + 3408 + 3528 + 3333 = $13,512 Mil.
Gross Profit was 1333 + 1425 + 1462 + 1387 = $5,607 Mil.
Total Current Assets was $7,715 Mil.
Total Assets was $15,878 Mil.
Property, Plant and Equipment(Net PPE) was $2,888 Mil.
Depreciation, Depletion and Amortization(DDA) was $421 Mil.
Selling, General & Admin. Expense(SGA) was $3,200 Mil.
Total Current Liabilities was $4,461 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)
=(2736 / 15108) / (2813 / 13512)
=0.18109611 / 0.20818532
=0.8699

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)
=(1742 / 13512) / (1594 / 15108)
=0.41496448 / 0.42838231
=0.9687

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 - (7214 + 2876) / 15863) / (1 - (7715 + 2888) / 15878)
=0.36392864 / 0.33222068
=1.0954

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
=15108 / 13512
=1.1181

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))
=(421 / (421 + 2888)) / (475 / (475 + 2876))
=0.12722877 / 0.14174873
=0.8976

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)
=(3699 / 15108) / (3200 / 13512)
=0.24483717 / 0.23682652
=1.0338

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)
=((3372 + 4135) / 15863) / ((3368 + 4461) / 15878)
=0.47323961 / 0.49307218
=0.9598

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
=(3231 - 120 - 1791) / 15863
=0.0832

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 -2.09 signals that the company is likely to 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 1.01411.09710.98651.00950.85721.21370.96380.91871.0950.8699
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 -0.0425-0.0294-0.0282-0.0192-0.0665-0.0768-0.0361-0.0237-0.06130.0832
M-score -2.57-2.61-2.51-2.44-2.51-2.86-2.66-2.57-2.80-2.09

PPG Industries Inc Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 0.93160.91870.97490.99861.1051.0950.94860.98410.9210.8699
GMI 0.99110.99520.99720.98080.9610.93970.94970.95320.95930.9687
AQI 0.92210.98870.97640.96740.95760.96190.98061.06621.07881.0954
SGI 1.12061.10891.06180.99090.93480.90780.920.98951.06261.1181
DEPI 1.60971.01661.04351.0411.11041.15140.96880.9760.92940.8976
SGAI 0.96210.9791.0071.03821.06841.091.05831.05461.04471.0338
LVGI 1.08720.9880.99241.02960.99210.97460.90520.91390.9230.9598
TATA -0.0224-0.0237-0.0238-0.0228-0.0238-0.06130.07560.06240.05490.0832
M-score -2.53-2.57-2.56-2.63-2.59-2.80-2.26-2.19-2.22-2.09
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