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Note: Financial institutions were excluded from the sample in Beneish paper when calculating Beneish M-Score. Thus, the prediction might not fit banks and insurance companies.
The zones of discrimination for M-Score is as such:
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.
Good Sign:
Beneish M-Score -2.51 no higher than -1.78, which implies that the company is unlikely to be a manipulator.
The historical rank and industry rank for PNC Financial Services Group's Beneish M-Score or its related term are showing as below:
During the past 13 years, the highest Beneish M-Score of PNC Financial Services Group was -2.27. The lowest was -2.87. And the median was -2.52.
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 PNC Financial Services Group 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 * 1.1164 | + | 0.528 * 1 | + | 0.404 * 1 | + | 0.892 * 0.9215 | + | 0.115 * 1 | |
- | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI | |||||||
- | 0.172 * 1.0649 | + | 4.679 * -0.004609 | - | 0.327 * 1.0952 | |||||||
= | -2.51 |
* 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.
This Year (Jun24) TTM: | Last Year (Jun23) TTM: |
Total Receivables was $6,481 Mil. Revenue was 4671 + 5146 + 5373 + 5234 = $20,424 Mil. Gross Profit was 4671 + 5146 + 5373 + 5234 = $20,424 Mil. Total Current Assets was $0 Mil. Total Assets was $556,519 Mil. Property, Plant and Equipment(Net PPE) was $0 Mil. Depreciation, Depletion and Amortization(DDA) was $166 Mil. Selling, General, & Admin. Expense(SGA) was $7,656 Mil. Total Current Liabilities was $0 Mil. Long-Term Debt & Capital Lease Obligation was $71,391 Mil. Net Income was 1459 + 1330 + 864 + 1554 = $5,207 Mil. Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil. Cash Flow from Operations was 1035 + 1758 + 4864 + 115 = $7,772 Mil. |
Total Receivables was $6,300 Mil. Revenue was 5293 + 5575 + 5747 + 5550 = $22,165 Mil. Gross Profit was 5293 + 5575 + 5747 + 5550 = $22,165 Mil. Total Current Assets was $0 Mil. Total Assets was $558,207 Mil. Property, Plant and Equipment(Net PPE) was $0 Mil. Depreciation, Depletion and Amortization(DDA) was $247 Mil. Selling, General, & Admin. Expense(SGA) was $7,802 Mil. Total Current Liabilities was $0 Mil. Long-Term Debt & Capital Lease Obligation was $65,384 Mil. |
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.
DSRI | = | (Receivables_t / Revenue_t) | / | (Receivables_t-1 / Revenue_t-1) |
= | (6481 / 20424) | / | (6300 / 22165) | |
= | 0.317323 | / | 0.284232 | |
= | 1.1164 |
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) | |
= | (22165 / 22165) | / | (20424 / 20424) | |
= | 1 | / | 1 | |
= | 1 |
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 - (0 + 0) / 556519) | / | (1 - (0 + 0) / 558207) | |
= | 1 | / | 1 | |
= | 1 |
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 | |
= | 20424 | / | 22165 | |
= | 0.9215 |
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)) |
= | (247 / (247 + 0)) | / | (166 / (166 + 0)) | |
= | 1 | / | 1 | |
= | 1 |
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.
SGAI | = | (SGA_t / Sales_t) | / | (SGA_t-1 /Sales_t-1) |
= | (7656 / 20424) | / | (7802 / 22165) | |
= | 0.374853 | / | 0.351996 | |
= | 1.0649 |
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
LVGI | = | ((LTD_t + CurrentLiabilities_t) / TotalAssets_t) | / | ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1) |
= | ((71391 + 0) / 556519) | / | ((65384 + 0) / 558207) | |
= | 0.128281 | / | 0.117132 | |
= | 1.0952 |
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 | |
= | (5207 - 0 | - | 7772) | / | 556519 | |
= | -0.004609 |
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.
PNC Financial Services Group has a M-score of -2.51 suggests that the company is unlikely to be a manipulator.
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William S Demchak | officer: Vice Chairman and CFO | THE TOWER AT PNC PLAZA, 300 FIFTH AVENUE, PITTSBURGH PA 15222-2707 |
Michael P. Lyons | officer: Executive Vice President | 249 FIFTH AVENUE, 1PNC, PITTSBURGH PA 15222 |
Richard Kevin Bynum | officer: Executive Vice President | 7567 GLEN POINTE CT., SPRINGFIELD VA 22153 |
Michael J Hannon | officer: Chief Credit Policy Officer | 249 FIFTH AVE, P1-POPP-30-1, PITTSBURGH PA 15222 |
Guild Deborah | officer: Executive Vice President | 847 PERSIMMON ROAD, SEWICKLEY PA 15143 |
Bryan Scott Salesky | director | 2545 RAILROAD ST, SUITE 400, PITTSBURGH PA 15222 |
Joseph Alvarado | director | 705 N. BAR Y ROAD, P.O. BOX 11368, JACKSON WY 83002 |
Kieran John Fallon | officer: Executive Vice President | 17160 SPRING CREEK LANE, LEESBURG VA 20176 |
Overstrom Alexander E. C. | officer: Executive Vice President | 643 PITCAIRN PLACE, PITTSBURGH PA 15232 |
Renu Khator | director | 11 GREENWAY PLAZA, SUITE 2400, HOUSTON TX 77046 |
Robert A Niblock | director | 1605 CURTIS BRIDGE ROAD, WILKESBORO NC 28697 |
Martin Pfinsgraff | director | 354 KINGSBERRY DRIVE, ANNAPOLIS MD 21409 |
Karen L. Larrimer | officer: Executive Vice President | ONE PNC PLAZA, 249 FIFTH AVENUE, PITTSBURGH PA 15222-2707 |
Ganesh Manapra Krishnan | officer: Executive Vice President | 6416 INTERLAKEN DR, MCDONALD PA 15057 |
David L Cohen | director |
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