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Energy Company of Minas Gerais (NYSE:CIG)
Beneish M-Score
-2.43 (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 -2.56 suggests that the company is not a manipulator.

CIG' s 10-Year Beneish M-Score Range
Min: -3.23   Max: -1.56
Current: -2.43

-3.23
-1.56

During the past 13 years, the highest Beneish M-Score of Energy Company of Minas Gerais was -1.56. The lowest was -3.23. And the median was -2.48.


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 * 0.8386+0.528 * 0.9475+0.404 * 1.1258+0.892 * 1.1868+0.115 * 0.9829
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.6363+4.679 * -0.0262-0.327 * 1.1889
=-2.56

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Dec14) TTM:Last Year (Dec13) TTM:
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.
Net Income was $1,187 Mil.
Non Operating Income was $122 Mil.
Cash Flow from Operations was $1,413 Mil.
Accounts Receivable was $815 Mil.
Revenue was $6,232 Mil.
Gross Profit was $2,036 Mil.
Total Current Assets was $2,841 Mil.
Total Assets was $12,703 Mil.
Property, Plant and Equipment(Net PPE) was $2,478 Mil.
Depreciation, Depletion and Amortization(DDA) was $351 Mil.
Selling, General & Admin. Expense(SGA) was $392 Mil.
Total Current Liabilities was $2,523 Mil.
Long-Term Debt was $3,076 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)
=(810.780120368 / 7396.19213445) / (814.657008948 / 6232.21133362)
=0.10962129 / 0.13071717
=0.8386

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)
=( / 6232.21133362) / ( / 7396.19213445)
=0.32672455 / 0.34483112
=0.9475

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 - (2480.79034029 + 2098.48972331) / 13248.0411825) / (1 - (2841.49978696 + 2478.48317) / 12703.0251385)
=0.65434286 / 0.58120346
=1.1258

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
=7396.19213445 / 6232.21133362
=1.1868

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))
=(351.086493396 / (351.086493396 + 2478.48317)) / (303.190885348 / (303.190885348 + 2098.48972331))
=0.1240777 / 0.12624113
=0.9829

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)
=(295.999091563 / 7396.19213445) / (391.98977418 / 6232.21133362)
=0.04002047 / 0.06289738
=0.6363

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)
=((3110.64006965 + 3831.71202544) / 13248.0411825) / ((3075.84149979 + 2523.22113336) / 12703.0251385)
=0.52402857 / 0.44076608
=1.1889

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
=(1187.40300541 - 121.503463416 - 1413.37673644) / 13248.0411825
=-0.0262

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 -2.56 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 own currency.

Energy Company of Minas Gerais Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.3621.09680.96110.69041.19480.87580.98671.86980.43180.8386
GMI 0.86251.17480.96331.08581.67511.12780.95171.16160.96170.9475
AQI 0.88311.05960.86670.9862.2641.16121.04451.01251.07211.1258
SGI 1.16831.22121.31341.08061.21631.1711.05330.79440.91611.1868
DEPI 1.07780.91680.95211.14350.5271.02480.96340.91790.89480.9829
SGAI 0.84411.44112.24340.37510.56320.66561.38890.82551.16380.6363
LVGI 1.22721.04490.97860.96541.19571.06971.04440.9350.85721.1889
TATA 0.0002-0.0718-0.0612-0.0663-0.0144-0.0334-0.040.0177-0.0593-0.0262
M-score -2.15-2.51-2.81-2.83-1.35-2.43-2.72-1.65-3.34-2.56
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