Switch to:
GuruFocus has detected 6 Warning Signs with Procter & Gamble Co $PG.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Procter & Gamble Co (NYSE:PG)
Beneish M-Score
-2.42 (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.

Procter & Gamble Co has a M-score of -2.42 suggests that the company is not a manipulator.

PG' s Beneish M-Score Range Over the Past 10 Years
Min: -3.25   Max: -1.92
Current: -2.42

-3.25
-1.92

During the past 13 years, the highest Beneish M-Score of Procter & Gamble Co was -1.92. The lowest was -3.25. And the median was -2.64.


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 Procter & Gamble 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 * 0.959+0.528 * 0.9875+0.404 * 1.0649+0.892 * 0.9898+0.115 * 1.0332
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0292+4.679 * 0.0171-0.327 * 0.9776
=-2.42

* 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 $4,358 Mil.
Revenue was 15605 + 16856 + 16518 + 16102 = $65,081 Mil.
Gross Profit was 7769 + 8558 + 8416 + 7720 = $32,463 Mil.
Total Current Assets was $25,885 Mil.
Total Assets was $118,091 Mil.
Property, Plant and Equipment(Net PPE) was $19,219 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,939 Mil.
Selling, General & Admin. Expense(SGA) was $18,955 Mil.
Total Current Liabilities was $29,082 Mil.
Long-Term Debt was $16,633 Mil.
Net Income was 2522 + 7875 + 2714 + 1951 = $15,062 Mil.
Non Operating Income was 26 + -539 + 63 + 287 = $-163 Mil.
Cash Flow from Operations was 3040 + 3000 + 3025 + 4139 = $13,204 Mil.
Accounts Receivable was $4,591 Mil.
Revenue was 15755 + 16915 + 16527 + 16553 = $65,750 Mil.
Gross Profit was 7840 + 8455 + 8375 + 7716 = $32,386 Mil.
Total Current Assets was $34,317 Mil.
Total Assets was $127,508 Mil.
Property, Plant and Equipment(Net PPE) was $19,186 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,047 Mil.
Selling, General & Admin. Expense(SGA) was $18,607 Mil.
Total Current Liabilities was $31,357 Mil.
Long-Term Debt was $19,134 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)
=(4358 / 65081) / (4591 / 65750)
=0.06696271 / 0.0698251
=0.959

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)
=(32386 / 65750) / (32463 / 65081)
=0.49256274 / 0.49880918
=0.9875

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 - (25885 + 19219) / 118091) / (1 - (34317 + 19186) / 127508)
=0.61805726 / 0.58039496
=1.0649

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
=65081 / 65750
=0.9898

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))
=(3047 / (3047 + 19186)) / (2939 / (2939 + 19219))
=0.13704853 / 0.13263832
=1.0332

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)
=(18955 / 65081) / (18607 / 65750)
=0.29125244 / 0.2829962
=1.0292

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)
=((16633 + 29082) / 118091) / ((19134 + 31357) / 127508)
=0.38711672 / 0.395983
=0.9776

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
=(15062 - -163 - 13204) / 118091
=0.0171

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.

Procter & Gamble Co has a M-score of -2.42 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.

Procter & Gamble Co Annual Data

Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15Jun16
DSRI 1.03290.95410.92010.88821.14480.95641.09781.05660.75221.0372
GMI 0.98881.00761.04210.95361.02181.02730.98841.05350.99830.9601
AQI 1.00281.00311.00991.01460.97720.98970.98810.93170.98890.9395
SGI 1.1211.06890.93821.02931.02741.01110.9770.92870.95090.923
DEPI 0.88921.03820.97280.98321.18230.86561.12310.98010.89761.0036
SGAI 0.99380.9830.94321.07321.00260.9981.02420.88881.01020.9959
LVGI 0.95040.96641.00950.93141.00120.97541.01491.05151.00131.0524
TATA -0.0265-0.0236-0.0139-0.0258-0.0135-0.0205-0.0323-0.0175-0.0619-0.0413
M-score -2.47-2.55-2.64-2.69-2.36-2.60-2.57-2.57-3.06-2.77

Procter & Gamble Co Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.94370.90720.75890.81230.85590.94711.03721.04681.02770.959
GMI 1.0681.07460.99770.97850.95670.93450.96010.97070.97510.9875
AQI 0.92560.93490.98890.91330.94680.95790.93951.00171.08551.0649
SGI 0.88960.86580.94260.93850.95070.97140.9230.95310.97470.9898
DEPI 0.91940.90230.89760.91430.9510.9911.00361.00920.99091.0332
SGAI 0.88720.87041.01251.0121.00741.03050.99591.00521.02621.0292
LVGI 1.04951.0171.00131.02471.00211.05291.05241.04981.0080.9776
TATA -0.0464-0.0478-0.0619-0.0563-0.0581-0.0518-0.0413-0.03650.01720.0171
M-score -2.85-2.89-3.06-3.04-2.98-2.87-2.77-2.68-2.38-2.42
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GF Chat

{{numOfNotice}}
FEEDBACK