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GuruFocus has detected 6 Warning Signs with Ball Corp $BLL.
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Ball Corp (NYSE:BLL)
Beneish M-Score
-1.95 (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.

Ball Corp has a M-score of -1.95 signals that the company is a manipulator.

BLL' s Beneish M-Score Range Over the Past 10 Years
Min: -3.75   Max: -1.03
Current: -1.95

-3.75
-1.03

During the past 13 years, the highest Beneish M-Score of Ball Corp was -1.03. The lowest was -3.75. And the median was -2.64.


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 Ball 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 * 1.194+0.528 * 0.9829+0.404 * 1.0061+0.892 * 1.2489+0.115 * 0.9082
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9887+4.679 * 0.0196-0.327 * 0.8301
=-1.95

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $1,354 Mil.
Revenue was 2473 + 2461 + 2815 + 2030 = $9,779 Mil.
Gross Profit was 498 + 516 + 477 + 434 = $1,925 Mil.
Total Current Assets was $3,907 Mil.
Total Assets was $16,644 Mil.
Property, Plant and Equipment(Net PPE) was $4,403 Mil.
Depreciation, Depletion and Amortization(DDA) was $526 Mil.
Selling, General & Admin. Expense(SGA) was $547 Mil.
Total Current Liabilities was $3,018 Mil.
Long-Term Debt was $7,476 Mil.
Net Income was 68 + 53 + 0 + 338 = $459 Mil.
Non Operating Income was 0 + -1 + -2 + -46 = $-49 Mil.
Cash Flow from Operations was -398 + 627 + -469 + 422 = $182 Mil.
Accounts Receivable was $908 Mil.
Revenue was 1756 + 1805 + 2097 + 2172 = $7,830 Mil.
Gross Profit was 340 + 371 + 407 + 397 = $1,515 Mil.
Total Current Assets was $2,323 Mil.
Total Assets was $10,059 Mil.
Property, Plant and Equipment(Net PPE) was $2,730 Mil.
Depreciation, Depletion and Amortization(DDA) was $293 Mil.
Selling, General & Admin. Expense(SGA) was $443 Mil.
Total Current Liabilities was $2,232 Mil.
Long-Term Debt was $5,408 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)
=(1354 / 9779) / (908 / 7830)
=0.13845997 / 0.11596424
=1.194

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)
=(1515 / 7830) / (1925 / 9779)
=0.19348659 / 0.19685039
=0.9829

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 - (3907 + 4403) / 16644) / (1 - (2323 + 2730) / 10059)
=0.50072098 / 0.49766378
=1.0061

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
=9779 / 7830
=1.2489

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))
=(293 / (293 + 2730)) / (526 / (526 + 4403))
=0.09692359 / 0.10671536
=0.9082

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)
=(547 / 9779) / (443 / 7830)
=0.05593619 / 0.05657727
=0.9887

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)
=((7476 + 3018) / 16644) / ((5408 + 2232) / 10059)
=0.63049748 / 0.75951884
=0.8301

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
=(459 - -49 - 182) / 16644
=0.0196

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.

Ball Corp has a M-score of -1.95 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 local exchange's currency.

Ball Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.9010.73071.35121.43030.87461.01620.95320.98081.01891.3553
GMI 1.03720.97470.91390.97991.00431.00440.95050.96691.01210.9857
AQI 0.98460.98761.03960.97411.01331.02290.98860.98081.33321.0102
SGI 1.1161.02320.90861.11061.13121.01210.96941.0120.93311.1332
DEPI 0.93850.92021.12741.06210.96091.08050.98481.0831.07681.0282
SGAI 1.00990.87011.20381.02580.93890.99861.12021.11.03721.0018
LVGI 0.96241.01560.91841.03011.05991.01691.02811.01081.1110.8661
TATA -0.0714-0.0484-0.0265-0.0055-0.0692-0.0589-0.0483-0.0672-0.06280.0074
M-score -2.78-2.94-2.39-2.04-2.81-2.71-2.84-2.84-2.71-1.96

Ball Corp Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.98080.98671.09731.09311.01891.0921.55181.46661.35531.194
GMI 0.96691.00271.0341.03751.01210.99580.93940.98430.98570.9829
AQI 0.98080.93940.9550.96211.33321.37681.15831.3791.01021.0061
SGI 1.0121.00030.97580.96370.93310.92270.91891.02211.13321.2489
DEPI 1.0831.0761.06941.07541.07681.06921.59421.29141.02820.9082
SGAI 1.11.13711.15821.07281.03721.01230.9730.96411.00180.9887
LVGI 1.01081.01341.00351.01061.1111.12081.12490.93650.86610.8301
TATA -0.0672-0.0665-0.0692-0.0739-0.0628-0.0608-0.01690.02160.00740.0196
M-score -2.84-2.85-2.76-2.78-2.71-2.63-2.06-1.72-1.96-1.95
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