Graco Beneish M-Score

Graco Beneish M-Score Calculation

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 Graco for today is based on a combination of the following eight different indices:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

1. DSRI = Days Sales in Receivables Index

Measured as the ratio of Revenue in Total Receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

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.

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.

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.

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.

Note: If the Depreciation, Depletion and Amortization data is not available, we assume that the depreciation rate is constant and set the Depreciation Index to 1.

6. SGAI = Sales, General and Administrative expenses Index

The ratio of Selling, General, & Admin. Expense(SGA) to Sales in year t relative to year t-1.

SGA expenses index > 1 means that the company is becoming less efficient in generate sales.

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 in leverage

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator. An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.

Graco has a M-score of -2.25 suggests that the company is unlikely to be a manipulator.

Graco Beneish M-Score Related Terms

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Graco Business Description

Industry

Industrials » Industrial Products NAICS : 333249 SIC : 3561

Comparable Companies

NYSE:AOS NAS:NDSN NYSE:PNR NYSE:RRX NAS:MIDD NYSE:LII NYSE:IEX NYSE:HWM NYSE:GTLS NYSE:DCI XTER:SIE NYSE:GE XKRX:373220 XPAR:SU NYSE:ITW NYSE:ETN NYSE:EMR OSTO:ATCO A NYSE:ROP TSE:6594

Traded in Other Exchanges

GA8:Germany GA8:Germany

Address

88-11th Avenue Northeast, Minneapolis, MN, USA, 55413

Website

https://www.graco.com

Graco manufactures equipment used for managing fluids, coatings, and adhesives, specializing in difficult-to-handle materials. Graco's business is organized into three segments: industrial, process, and contractor. The Minnesota-based firm serves a wide range of end markets, including industrial, automotive, and construction, and its broad array of products include pumps, valves, meters, sprayers, and equipment used to apply coatings, sealants, and adhesives. The firm generated roughly $2 billion in sales and $531 million in operating income in 2021.

Executives

Zumbolo Brian J	officer: President, Asia Pacific	PO BOX 1441 MINNEAPOLIS MN 55440-1441
Gallivan Karen Park	officer: Executive Vice President	P O BOX 1441 MINNEAPOLIS MN 55440-1441
Wheeler Kevin J.	director	A. O. SMITH CORPORATION 500 TENNESSEE WALTZ PARKWAY ASHLAND CITY TN 37015
Van Sant R William	director	PO BOX 1441 MINNEAPOLIS MN 55440-1441
Eugster Jack W	director	PO BOX 1441 MINNEAPOLIS MN 55440-1441
Etchart Eric	director	ROOM F, 22F CROSS REGION PLAZA 899 LINGLING ROAD SHANGHAI F4 200030
White Emily	director	C/O LULULEMON ATHLETICA INC. 1818 CORNWALL AVENUE VANCOUVER A1 V6J 1C7
Morfitt Martha A M	director	P.O. BOX 1441 MINNEAPOLIS MN 55440-1441
Mitau Lee R	director	P O BOX 1441 MINNEAPOLIS MN 55440-1441
Feragen Jody H	director	1 HORMEL PLACE AUSTIN TX 55912
Gilligan J Kevin	director	P O BOX 1441 MINNEAPOLIS MN 55440-1441
White Timothy R	officer: President, White Knight, QED	88 11TH AVENUE NE MINNEAPOLIS MN 55413
Johnson Dale D	officer: President, Worldwide CED	P.O. BOX 1441 MINNEAPOLIS MN 5440-1441
Chambers Caroline M	officer: President, EMEA	PO BOX 1441 MINNEAPOLIS MN 55440-1441
Wordell Angela F	officer: EVP, Operations, President ONG	88 11TH AVENUE NE MINNEAPOLIS MN 55413