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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 -2.53 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of PPL Corp was -1.89. The lowest was -3.86. And the median was -2.01.
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 * 1.2524||+||0.528 * 0.8323||+||0.404 * 0.8896||+||0.892 * 0.8608||+||0.115 * 1.0094|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0||+||4.679 * -0.042||-||0.327 * 1.0071|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $1,050 Mil.|
Revenue was 3449 + 2874 + 1223 + 2958 = $10,504 Mil.
Gross Profit was 1952 + 1864 + 1821 + 2014 = $7,651 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 $1,458 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $5,412 Mil.
Long-Term Debt was $20,522 Mil.
Net Income was 497 + 229 + 316 + -98 = $944 Mil.
Non Operating Income was -112 + -85 + -23 + -75 = $-295 Mil.
Cash Flow from Operations was 1045 + 652 + 931 + 634 = $3,262 Mil.
|Accounts Receivable was $974 Mil.
Revenue was 3074 + 3450 + 2457 + 3222 = $12,203 Mil.
Gross Profit was 1874 + 1828 + 1749 + 1947 = $7,398 Mil.
Total Current Assets was $4,971 Mil.
Total Assets was $44,988 Mil.
Property, Plant and Equipment(Net PPE) was $31,588 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,352 Mil.
Selling, General & Admin. Expense(SGA) was $151 Mil.
Total Current Liabilities was $4,948 Mil.
Long-Term Debt was $19,092 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(1050 / 10504)||/||(974 / 12203)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(1864 / 12203)||/||(1952 / 10504)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (5760 + 34397) / 48189)||/||(1 - (4971 + 31588) / 44988)|
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.
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))|
|=||(1352 / (1352 + 31588))||/||(1458 / (1458 + 34397))|
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)|
|=||(0 / 10504)||/||(151 / 12203)|
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)|
|=||((20522 + 5412) / 48189)||/||((19092 + 4948) / 44988)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(944 - -295||-||3262)||/||48189|
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 -2.53 suggests that the company will not be a manipulator.
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
PPL Corp Annual Data
PPL Corp Quarterly Data