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GuruFocus has detected 3 Warning Signs with Genuine Parts Co $GPC.
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Genuine Parts Co (NYSE:GPC)
Beneish M-Score
-2.57 (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.

Genuine Parts Co has a M-score of -2.57 suggests that the company is not a manipulator.

GPC' s Beneish M-Score Range Over the Past 10 Years
Min: -3.21   Max: -1.89
Current: -2.57

-3.21
-1.89

During the past 13 years, the highest Beneish M-Score of Genuine Parts Co was -1.89. The lowest was -3.21. And the median was -2.39.


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 Genuine Parts Co 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 * 1.0341+0.528 * 0.9947+0.404 * 1.0142+0.892 * 1.0174+0.115 * 1.0477
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0269+4.679 * -0.0249-0.327 * 1.0599
=-2.57

* 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 $2,085 Mil.
Revenue was 3905.641 + 3780.065 + 3941.743 + 3899.638 = $15,527 Mil.
Gross Profit was 1155.721 + 1131.083 + 1198.601 + 1165.452 = $4,651 Mil.
Total Current Assets was $6,194 Mil.
Total Assets was $9,167 Mil.
Property, Plant and Equipment(Net PPE) was $737 Mil.
Depreciation, Depletion and Amortization(DDA) was $151 Mil.
Selling, General & Admin. Expense(SGA) was $3,421 Mil.
Total Current Liabilities was $4,580 Mil.
Long-Term Debt was $550 Mil.
Net Income was 160.16 + 152.52 + 185.326 + 191.369 = $689 Mil.
Non Operating Income was 0 + 4.568 + 0 + 0 = $5 Mil.
Cash Flow from Operations was 101.82 + 204.726 + 210.86 + 395.447 = $913 Mil.
Accounts Receivable was $1,982 Mil.
Revenue was 3718.267 + 3681.79 + 3921.802 + 3940.401 = $15,262 Mil.
Gross Profit was 1104.471 + 1095.478 + 1169.225 + 1178.33 = $4,548 Mil.
Total Current Assets was $5,770 Mil.
Total Assets was $8,451 Mil.
Property, Plant and Equipment(Net PPE) was $648 Mil.
Depreciation, Depletion and Amortization(DDA) was $140 Mil.
Selling, General & Admin. Expense(SGA) was $3,275 Mil.
Total Current Liabilities was $4,212 Mil.
Long-Term Debt was $250 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)
=(2084.871 / 15527.087) / (1981.651 / 15262.26)
=0.13427316 / 0.12983995
=1.0341

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)
=(4547.504 / 15262.26) / (4650.857 / 15527.087)
=0.29795745 / 0.29953184
=0.9947

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 - (6194.062 + 737.206) / 9166.826) / (1 - (5770.268 + 648.204) / 8450.527)
=0.24387482 / 0.24046488
=1.0142

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
=15527.087 / 15262.26
=1.0174

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))
=(140.445 / (140.445 + 648.204)) / (150.965 / (150.965 + 737.206))
=0.17808303 / 0.1699729
=1.0477

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)
=(3421.475 / 15527.087) / (3275.007 / 15262.26)
=0.22035524 / 0.21458205
=1.0269

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)
=((550 + 4579.833) / 9166.826) / ((250 + 4211.926) / 8450.527)
=0.55960842 / 0.52800565
=1.0599

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
=(689.375 - 4.568 - 912.853) / 9166.826
=-0.0249

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.

Genuine Parts Co has a M-score of -2.57 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 local exchange's currency.

Genuine Parts Co Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.95540.99111.06171.03140.96330.97641.03291.0320.97721.0596
GMI 1.05560.99870.99281.0311.00280.9970.96851.00111.00430.9944
AQI 1.1951.6620.9471.06471.47541.36571.1161.03280.99081.0338
SGI 1.03681.01590.91311.11441.11161.04451.08181.08980.9961.0039
DEPI 0.85550.98541.10271.00861.03191.020.88830.91941.01041.0648
SGAI 0.91891.01371.03030.95670.98610.98031.05371.00430.99291.0245
LVGI 0.99740.98391.02121.06620.99640.99291.19241.03281.03891.0517
TATA -0.0239-0.002-0.0837-0.0327-0.0066-0.0385-0.0478-0.0088-0.0556-0.0297
M-score -2.49-2.22-2.92-2.47-2.24-2.49-2.66-2.42-2.78-2.56

Genuine Parts Co Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.0321.01561.00110.96880.97721.01421.02881.04751.05961.0341
GMI 1.00111.01031.01341.01051.00431.00381.00170.99770.99440.9947
AQI 1.03280.96220.94850.94760.99081.0121.00991.03411.03381.0142
SGI 1.08981.06541.05081.02550.9960.98770.9830.98841.00391.0174
DEPI 0.91940.96340.96650.9531.01041.04271.09051.0861.06481.0477
SGAI 1.00430.99140.98090.98320.99290.9940.99771.00771.02451.0269
LVGI 1.03281.05211.0691.04841.03891.02131.03881.03381.05171.0599
TATA -0.0088-0.016-0.0188-0.0464-0.0556-0.0554-0.0621-0.0352-0.0297-0.0249
M-score -2.42-2.51-2.56-2.74-2.78-2.73-2.76-2.60-2.56-2.57
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