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