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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.
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 -2.39.
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 * 1.3202||+||0.528 * 1.5277||+||0.404 * 1.4173||+||0.892 * 0.6825||+||0.115 * 1.0273|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2656||+||4.679 * -0.0697||-||0.327 * 1.0893|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $962 Mil.|
Revenue was 1388.7208623 + 1203.80205516 + 1357.05318491 + 1225.66099611 = $5,175 Mil.
Gross Profit was 361.280014021 + 356.391833423 + 116.468253968 + 344.076655052 = $1,178 Mil.
Total Current Assets was $2,382 Mil.
Total Assets was $12,490 Mil.
Property, Plant and Equipment(Net PPE) was $1,124 Mil.
Depreciation, Depletion and Amortization(DDA) was $217 Mil.
Selling, General & Admin. Expense(SGA) was $489 Mil.
Total Current Liabilities was $3,326 Mil.
Long-Term Debt was $3,163 Mil.
Net Income was 59.0193959222 + 1.38426176312 + 78.7881364667 + 42.7854068457 = $182 Mil.
Non Operating Income was 21.0226675235 + -27.4432125473 + 37.9862399505 + 47.9094076655 = $79 Mil.
Cash Flow from Operations was 287.72565286 + 162.249864792 + 159.245516388 + 363.547858168 = $973 Mil.
|Accounts Receivable was $1,068 Mil.
Revenue was 1732.96911656 + 1861.99751703 + 2363.62844922 + 1624.10710467 = $7,583 Mil.
Gross Profit was 591.985731272 + 750.465397593 + 739.289904993 + 555.626844604 = $2,637 Mil.
Total Current Assets was $4,344 Mil.
Total Assets was $11,927 Mil.
Property, Plant and Equipment(Net PPE) was $1,531 Mil.
Depreciation, Depletion and Amortization(DDA) was $305 Mil.
Selling, General & Admin. Expense(SGA) was $567 Mil.
Total Current Liabilities was $3,024 Mil.
Long-Term Debt was $2,664 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(962.201320325 / 5175.23709848)||/||(1067.9050037 / 7582.70218748)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(2637.36787846 / 7582.70218748)||/||(1178.21675647 / 5175.23709848)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (2382.42682713 + 1124.32085062) / 12489.9222995)||/||(1 - (4343.60638879 + 1530.99591863) / 11926.9209757)|
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.
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))|
|=||(304.520928296 / (304.520928296 + 1530.99591863))||/||(216.556171174 / (216.556171174 + 1124.32085062))|
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)|
|=||(489.491398726 / 5175.23709848)||/||(566.672386183 / 7582.70218748)|
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)|
|=||((3163.22953789 + 3325.64117544) / 12489.9222995)||/||((2664.13857377 + 3024.39181155) / 11926.9209757)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(181.977200998 - 79.4751025922||-||972.768892208)||/||12489.9222995|
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 -2.42 suggests that the company will not be a manipulator.
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
Energy Company of Minas Gerais Annual Data
Energy Company of Minas Gerais Quarterly Data