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GuruFocus has detected 8 Warning Signs with Coca-Cola Co $NYSE:KO.
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Coca-Cola Co (NYSE:KO)
Beneish M-Score
-2.72 (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.

Coca-Cola Co has a M-score of -2.72 suggests that the company is not a manipulator.

NYSE:KO' s Beneish M-Score Range Over the Past 10 Years
Min: -2.96   Max: -2.25
Current: -2.72

-2.96
-2.25

During the past 13 years, the highest Beneish M-Score of Coca-Cola Co was -2.25. The lowest was -2.96. And the median was -2.63.


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 Coca-Cola 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 * 0.9621+0.528 * 0.9887+0.404 * 0.9785+0.892 * 0.9278+0.115 * 0.9235
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9703+4.679 * -0.0238-0.327 * 1.0389
=-2.72

* 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 $3,702 Mil.
Revenue was 9118 + 9409 + 10633 + 11539 = $40,699 Mil.
Gross Profit was 5605 + 5615 + 6502 + 7068 = $24,790 Mil.
Total Current Assets was $40,251 Mil.
Total Assets was $91,201 Mil.
Property, Plant and Equipment(Net PPE) was $9,746 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,657 Mil.
Selling, General & Admin. Expense(SGA) was $9,105 Mil.
Total Current Liabilities was $28,656 Mil.
Long-Term Debt was $31,538 Mil.
Net Income was 1182 + 550 + 1046 + 3448 = $6,226 Mil.
Non Operating Income was -438 + -762 + -825 + 1438 = $-587 Mil.
Cash Flow from Operations was 788 + 2073 + 2903 + 3216 = $8,980 Mil.
Accounts Receivable was $4,147 Mil.
Revenue was 10282 + 10000 + 11427 + 12156 = $43,865 Mil.
Gross Profit was 6213 + 5946 + 6850 + 7408 = $26,417 Mil.
Total Current Assets was $36,510 Mil.
Total Assets was $91,263 Mil.
Property, Plant and Equipment(Net PPE) was $12,613 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,955 Mil.
Selling, General & Admin. Expense(SGA) was $10,114 Mil.
Total Current Liabilities was $30,987 Mil.
Long-Term Debt was $26,990 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)
=(3702 / 40699) / (4147 / 43865)
=0.09096047 / 0.09454007
=0.9621

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)
=(26417 / 43865) / (24790 / 40699)
=0.60223413 / 0.60910587
=0.9887

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 - (40251 + 9746) / 91201) / (1 - (36510 + 12613) / 91263)
=0.45179329 / 0.46174244
=0.9785

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
=40699 / 43865
=0.9278

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))
=(1955 / (1955 + 12613)) / (1657 / (1657 + 9746))
=0.13419824 / 0.14531264
=0.9235

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)
=(9105 / 40699) / (10114 / 43865)
=0.22371557 / 0.23057107
=0.9703

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)
=((31538 + 28656) / 91201) / ((26990 + 30987) / 91263)
=0.66001469 / 0.63527388
=1.0389

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
=(6226 - -587 - 8980) / 91201
=-0.0238

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.

Coca-Cola Co has a M-score of -2.72 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.

Coca-Cola Co Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.07030.84151.25361.04020.8380.93761.04940.93350.91641.0352
GMI 1.03390.99291.00271.00571.04921.0090.9940.9931.00950.9977
AQI 1.07390.94290.89661.13360.98460.97111.01270.99251.01390.9983
SGI 1.1981.1070.97011.13321.32531.03170.97580.98170.9630.9451
DEPI 0.99320.93711.12281.28280.77150.96051.03210.98070.87820.9418
SGAI 0.95460.97180.99441.02510.99641.05180.47260.97841.26940.9756
LVGI 1.11991.02040.99151.15681.06281.0411.0561.07181.09811.0495
TATA -0.0465-0.0229-0.0449-0.0542-0.0264-0.03-0.0348-0.0329-0.0477-0.0214
M-score -2.44-2.67-2.51-2.54-2.49-2.68-2.54-2.74-2.89-2.62

Coca-Cola Co Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.93350.85730.85710.81030.91640.97771.01291.07811.03520.9621
GMI 0.9930.9941.00091.01191.00951.01591.01131.00030.99770.9887
AQI 0.99250.98471.01360.98331.01390.94330.97671.01280.99830.9785
SGI 0.98170.99440.98910.97830.9630.95080.9460.940.94510.9278
DEPI 0.98070.96990.97890.89960.87820.90210.91930.9390.94180.9235
SGAI 0.97840.71160.8820.64771.26941.54671.492.00670.97560.9703
LVGI 1.07181.07541.09171.12611.09811.10751.0661.0241.04951.0389
TATA -0.0329-0.0411-0.0534-0.0522-0.0477-0.0348-0.0227-0.0215-0.0214-0.0238
M-score -2.74-2.80-2.88-2.91-2.89-2.86-2.74-2.74-2.62-2.72
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