2.39(1.8%) Volume: 3,968,361 10:08PM EDT| Market Cap : 182.14 B | Enterprise Value : 209.83 B | P/E (TTM) : 14.44 | P/B : 13.12 |
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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.
During the past 13 years, the highest Beneish M-Score of PepsiCo was -2.06. The lowest was -4.12. And the median was -2.70.
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
| PepsiCo Quarterly Data | ||||||||||||||||||||
| Sep14 | Dec14 | Mar15 | Jun15 | Sep15 | Dec15 | Mar16 | Jun16 | Sep16 | Dec16 | Mar17 | Jun17 | Sep17 | Dec17 | Mar18 | Jun18 | Sep18 | Dec18 | Mar19 | Jun19 | |
| Beneish M-Score |
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-2.71 | -2.70 | -2.18 | -2.13 | -2.06 |
* The bar in red indicates where PepsiCo's Beneish M-Score falls into.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski 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 PepsiCo 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 * 1.0663 | + | 0.528 * 0.9935 | + | 0.404 * 1.3416 | + | 0.892 * 1.0143 | + | 0.115 * 1.0442 | |
| - | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI | |||||||
| - | 0.172 * 1.0278 | + | 4.679 * 0.0375 | - | 0.327 * 0.905 | |||||||
| = | -2.06 |
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
| This Year (Jun19) TTM: | Last Year (Jun18) TTM: |
| Accounts Receivable was $8,615 Mil. Revenue was 16449 + 12884 + 19524 + 16485 = $65,342 Mil. Gross Profit was 9045 + 7196 + 10588 + 8958 = $35,787 Mil. Total Current Assets was $17,212 Mil. Total Assets was $75,084 Mil. Property, Plant and Equipment(Net PPE) was $17,442 Mil. Depreciation, Depletion and Amortization(DDA) was $2,385 Mil. Selling, General, & Admin. Expense(SGA) was $25,775 Mil. Total Current Liabilities was $19,928 Mil. Long-Term Debt & Capital Lease Obligation was $27,712 Mil. Net Income was 2035 + 1413 + 6854 + 2498 = $12,800 Mil. Non Operating Income was 61 + 64 + 67 + 74 = $266 Mil. Cash Flow from Operations was 1733 + -345 + 4683 + 3645 = $9,716 Mil. |
Accounts Receivable was $7,965 Mil. Revenue was 16090 + 12562 + 19526 + 16240 = $64,418 Mil. Gross Profit was 8827 + 6907 + 10447 + 8872 = $35,053 Mil. Total Current Assets was $30,370 Mil. Total Assets was $78,731 Mil. Property, Plant and Equipment(Net PPE) was $16,762 Mil. (DDA) was $2,408 Mil. Selling, General, & Admin. Expense(SGA) was $24,724 Mil. Total Current Liabilities was $24,558 Mil. Long-Term Debt & Capital Lease Obligation was $30,638 Mil. |
1. DSRI = Days Sales in Receivables Index
Measured as the ratio of Revenue in Accounts Receivable 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) |
| = | (8615 / 65342) | / | (7965 / 64418) | |
| = | 0.13184476 | / | 0.12364556 | |
| = | 1.0663 |
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) | |
| = | (35053 / 64418) | / | (35787 / 65342) | |
| = | 0.54414915 | / | 0.54768755 | |
| = | 0.9935 |
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 Property, Plant and Equipment to Total Assets.
| AQI | = | (1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) | / | (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1) |
| = | (1 - (17212 + 17442) / 75084) | / | (1 - (30370 + 16762) / 78731) | |
| = | 0.53846359 | / | 0.40135398 | |
| = | 1.3416 |
4. SGI = Sales Growth Index
Ratio of Revenue 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 | |
| = | 65342 | / | 64418 | |
| = | 1.0143 |
5. DEPI = Depreciation Index
Measured as the ratio of the rate of Depreciation, Depletion and Amortization 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)) |
| = | (2408 / (2408 + 16762)) | / | (2385 / (2385 + 17442)) | |
| = | 0.12561294 | / | 0.12029051 | |
| = | 1.0442 |
6. SGAI = Sales, General and Administrative expenses Index
The ratio of c 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) |
| = | (25775 / 65342) | / | (24724 / 64418) | |
| = | 0.39446298 | / | 0.38380577 | |
| = | 1.0278 |
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) |
| = | ((27712 + 19928) / 75084) | / | ((30638 + 24558) / 78731) | |
| = | 0.63448937 | / | 0.70107073 | |
| = | 0.905 |
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 | |
| = | (12800 - 266 | - | 9716) | / | 75084 | |
| = | 0.0375 |
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.
PepsiCo has a M-score of -2.06 signals that the company is likely to be a manipulator.
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- theStreet 2019-08-24 19:06:00
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