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Energy Company of Minas Gerais (NYSE:CIG)
Beneish M-Score
-2.32 (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.

Energy Company of Minas Gerais has a M-score of -2.34 suggests that the company is not a manipulator.

CIG' s Beneish M-Score Range Over the Past 10 Years
Min: -5.98   Max: 3.24
Current: -2.32

-5.98
3.24

During the past 13 years, the highest Beneish M-Score of Energy Company of Minas Gerais was 3.24. The lowest was -5.98. And the median was -2.32.


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 Energy Company of Minas Gerais 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 * 1.5342+0.528 * 1.3328+0.404 * 1.0301+0.892 * 0.7418+0.115 * 0.7219
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9963+4.679 * -0.0566-0.327 * 1.0248
=-2.34

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $923 Mil.
Revenue was $5,486 Mil.
Gross Profit was $1,420 Mil.
Total Current Assets was $2,416 Mil.
Total Assets was $10,528 Mil.
Property, Plant and Equipment(Net PPE) was $1,015 Mil.
Depreciation, Depletion and Amortization(DDA) was $215 Mil.
Selling, General & Admin. Expense(SGA) was $219 Mil.
Total Current Liabilities was $3,369 Mil.
Long-Term Debt was $2,285 Mil.
Net Income was $636 Mil.
Non Operating Income was $457 Mil.
Cash Flow from Operations was $775 Mil.
Accounts Receivable was $811 Mil.
Revenue was $7,396 Mil.
Gross Profit was $2,550 Mil.
Total Current Assets was $2,481 Mil.
Total Assets was $13,248 Mil.
Property, Plant and Equipment(Net PPE) was $2,098 Mil.
Depreciation, Depletion and Amortization(DDA) was $303 Mil.
Selling, General & Admin. Expense(SGA) was $296 Mil.
Total Current Liabilities was $3,832 Mil.
Long-Term Debt was $3,111 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)
=(922.747887034 / 5486.49762935) / (810.780120368 / 7396.19213445)
=0.16818523 / 0.10962129
=1.5342

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)
=(2550.43718536 / 7396.19213445) / (1419.55266955 / 5486.49762935)
=0.34483112 / 0.25873568
=1.3328

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 - (2416.25438054 + 1015.25458668) / 10527.9839208) / (1 - (2480.79034029 + 2098.48972331) / 13248.0411825)
=0.6740583 / 0.65434286
=1.0301

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
=5486.49762935 / 7396.19213445
=0.7418

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))
=(303.190885348 / (303.190885348 + 2098.48972331)) / (215.161822305 / (215.161822305 + 1015.25458668))
=0.12624113 / 0.17486911
=0.7219

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)
=(218.769325912 / 5486.49762935) / (295.999091563 / 7396.19213445)
=0.03987413 / 0.04002047
=0.9963

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)
=((2284.8381777 + 3368.89301175) / 10527.9839208) / ((3110.64006965 + 3831.71202544) / 13248.0411825)
=0.53701936 / 0.52402857
=1.0248

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
=(636.209029066 - 456.864564007 - 775.097917955) / 10527.9839208
=-0.0566

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.

Energy Company of Minas Gerais has a M-score of -2.34 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.

Energy Company of Minas Gerais Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.09680.96110.69041.19480.87581.25381.47140.43180.83861.5342
GMI 1.01890.9851.06181.67511.12780.98151.12630.96170.94751.3328
AQI 1.05960.86670.9862.2641.16121.04451.01251.07211.12581.0301
SGI 1.22121.31341.08061.21631.1710.82881.00950.91611.18680.7418
DEPI 0.91680.95211.14350.5271.02481.18030.74930.89480.98290.7219
SGAI 1.08360.72671.15790.56320.66561.10591.03681.16380.63630.9963
LVGI 1.05970.97860.96541.19571.06971.04440.9350.85721.18891.0248
TATA -0.0894-0.0719-0.0663-0.0144-0.0334-0.0483-0.0572-0.0593-0.0262-0.0566
M-score -2.62-2.59-2.98-1.35-2.43-2.63-2.25-3.34-2.56-2.34
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