Switch to:
PPG Industries Inc (NYSE:PPG)
Beneish M-Score
-2.21 (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 -2.21 signals that the company is a manipulator.

PPG' s 10-Year Beneish M-Score Range
Min: -2.89   Max: -2.01
Current: -2.21

-2.89
-2.01

During the past 13 years, the highest Beneish M-Score of PPG Industries Inc was -2.01. The lowest was -2.89. 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 * 0.8972+0.528 * 0.9755+0.404 * 1.1941+0.892 * 1.0768+0.115 * 1.0181
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0012+4.679 * 0.0491-0.327 * 1.0119
=-2.21

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $2,366 Mil.
Revenue was 3707 + 3935 + 4082 + 3636 = $15,360 Mil.
Gross Profit was 1542 + 1706 + 1776 + 1545 = $6,569 Mil.
Total Current Assets was $6,850 Mil.
Total Assets was $17,583 Mil.
Property, Plant and Equipment(Net PPE) was $3,092 Mil.
Depreciation, Depletion and Amortization(DDA) was $476 Mil.
Selling, General & Admin. Expense(SGA) was $3,758 Mil.
Total Current Liabilities was $4,876 Mil.
Long-Term Debt was $3,544 Mil.
Net Income was 83 + 371 + 386 + 1262 = $2,102 Mil.
Non Operating Income was -307 + 7 + 9 + 1 = $-290 Mil.
Cash Flow from Operations was 491 + 636 + 238 + 163 = $1,528 Mil.
Accounts Receivable was $2,449 Mil.
Revenue was 3500 + 3774 + 3883 + 3108 = $14,265 Mil.
Gross Profit was 1472 + 1613 + 1620 + 1246 = $5,951 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 $452 Mil.
Selling, General & Admin. Expense(SGA) was $3,486 Mil.
Total Current Liabilities was $4,135 Mil.
Long-Term Debt was $3,372 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)
=(2366 / 15360) / (2449 / 14265)
=0.15403646 / 0.17167893
=0.8972

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)
=(1706 / 14265) / (1542 / 15360)
=0.4171749 / 0.42766927
=0.9755

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 - (6850 + 3092) / 17583) / (1 - (7214 + 2876) / 15863)
=0.43456748 / 0.36392864
=1.1941

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
=15360 / 14265
=1.0768

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))
=(452 / (452 + 2876)) / (476 / (476 + 3092))
=0.13581731 / 0.13340807
=1.0181

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)
=(3758 / 15360) / (3486 / 14265)
=0.24466146 / 0.24437434
=1.0012

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)
=((3544 + 4876) / 17583) / ((3372 + 4135) / 15863)
=0.47887164 / 0.47323961
=1.0119

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
=(2102 - -290 - 1528) / 17583
=0.0491

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 -2.21 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

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

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.1050.99960.96451.01550.96320.90330.95930.89890.87880.8972
GMI 0.9610.93970.95760.96810.98030.99470.97370.96480.96740.9755
AQI 0.95760.96190.98061.06621.07881.09540.9530.89120.91331.1941
SGI 0.93480.90780.90480.95891.01611.05571.11331.0991.08171.0768
DEPI 1.11041.15140.98070.99730.96010.93680.97860.97570.94971.0181
SGAI 1.06841.091.05881.05361.0431.03191.04691.0341.01831.0012
LVGI 0.99210.97460.90520.91390.9230.95981.00730.98580.98881.0119
TATA -0.0238-0.04790.08960.07590.06790.10160.01190.03390.04030.0491
M-score -2.59-2.82-2.19-2.12-2.15-2.01-2.41-2.39-2.39-2.21
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK