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PPL Corp (NYSE:PPL)
Beneish M-Score
-2.68 (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.

PPL Corp has a M-score of -2.68 suggests that the company is not a manipulator.

PPL' s Beneish M-Score Range Over the Past 10 Years
Min: -2.87   Max: -1.97
Current: -2.68

-2.87
-1.97

During the past 13 years, the highest Beneish M-Score of PPL Corp was -1.97. The lowest was -2.87. 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 PPL Corp 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 * 0.4233+0.528 * 1.0132+0.404 * 0.9622+0.892 * 1.6041+0.115 * 0.6797
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.5086+4.679 * -0.0503-0.327 * 1.0517
=-2.68

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $713 Mil.
Revenue was 1878 + 1781 + 3165 + 5593 = $12,417 Mil.
Gross Profit was 1473 + 1397 + 2240 + 3194 = $8,304 Mil.
Total Current Assets was $2,990 Mil.
Total Assets was $39,246 Mil.
Property, Plant and Equipment(Net PPE) was $29,962 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,430 Mil.
Selling, General & Admin. Expense(SGA) was $124 Mil.
Total Current Liabilities was $4,468 Mil.
Long-Term Debt was $17,745 Mil.
Net Income was 393 + -757 + 647 + 695 = $978 Mil.
Non Operating Income was 75 + -102 + 94 + 78 = $145 Mil.
Cash Flow from Operations was 718 + 640 + 673 + 775 = $2,806 Mil.
Accounts Receivable was $1,050 Mil.
Revenue was 1879 + 1849 + 1194 + 2819 = $7,741 Mil.
Gross Profit was 1466 + 1446 + 458 + 1875 = $5,245 Mil.
Total Current Assets was $5,760 Mil.
Total Assets was $48,189 Mil.
Property, Plant and Equipment(Net PPE) was $34,397 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,099 Mil.
Selling, General & Admin. Expense(SGA) was $152 Mil.
Total Current Liabilities was $5,412 Mil.
Long-Term Debt was $20,522 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)
=(713 / 12417) / (1050 / 7741)
=0.05742128 / 0.13564139
=0.4233

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)
=(1397 / 7741) / (1473 / 12417)
=0.67756104 / 0.66876057
=1.0132

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 - (2990 + 29962) / 39246) / (1 - (5760 + 34397) / 48189)
=0.16037303 / 0.16667704
=0.9622

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
=12417 / 7741
=1.6041

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))
=(1099 / (1099 + 34397)) / (1430 / (1430 + 29962))
=0.03096124 / 0.04555301
=0.6797

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)
=(124 / 12417) / (152 / 7741)
=0.00998631 / 0.01963571
=0.5086

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)
=((17745 + 4468) / 39246) / ((20522 + 5412) / 48189)
=0.56599399 / 0.53817261
=1.0517

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
=(978 - 145 - 2806) / 39246
=-0.0503

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.

PPL Corp has a M-score of -2.68 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.

PPL Corp Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI
GMI
AQI
SGI
DEPI
SGAI
LVGI
TATA
M-score

PPL Corp Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 0.85780.61840.4233
GMI 0.85690.94681.0132
AQI 0.99970.94320.9622
SGI 1.1851.38971.6041
DEPI 0.99940.71410.6797
SGAI 0.76440.5870.5086
LVGI 0.94781.04851.0517
TATA -0.0268-0.059-0.0503
M-score -2.59-2.79-2.68
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