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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 1.25. The lowest was -4.74. And the median was -2.52.
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 * 1.2818||+||0.528 * 0.8879||+||0.404 * 1.0869||+||0.892 * 1.0481||+||0.115 * 0.9841|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0227||+||4.679 * -0.0268||-||0.327 * 1.0954|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $1,077 Mil.|
Revenue was 2118.85420394 + 2047.64387097 + 1688.96463571 + 1566.25441696 = $7,422 Mil.
Gross Profit was 675.731663685 + 849.433978495 + 439.710268428 + 484.540636042 = $2,449 Mil.
Total Current Assets was $3,289 Mil.
Total Assets was $14,640 Mil.
Property, Plant and Equipment(Net PPE) was $2,548 Mil.
Depreciation, Depletion and Amortization(DDA) was $358 Mil.
Selling, General & Admin. Expense(SGA) was $403 Mil.
Total Current Liabilities was $3,902 Mil.
Long-Term Debt was $3,174 Mil.
Net Income was 331.338998211 + 537.672688172 + 354.495100128 + 348.498233216 = $1,572 Mil.
Non Operating Income was -24.7558139535 + 80.9380645161 + 121.431614827 + 138.250883392 = $316 Mil.
Cash Flow from Operations was 699.910554562 + 265.806451613 + 366.851299531 + 315.371024735 = $1,648 Mil.
|Accounts Receivable was $802 Mil.
Revenue was 1582.60009204 + 1853.62600806 + 1833.01251203 + 1812.03749383 = $7,081 Mil.
Gross Profit was 420.020708698 + 680.643145161 + 391.241578441 + 583.127775037 = $2,075 Mil.
Total Current Assets was $3,447 Mil.
Total Assets was $13,842 Mil.
Property, Plant and Equipment(Net PPE) was $2,738 Mil.
Depreciation, Depletion and Amortization(DDA) was $378 Mil.
Selling, General & Admin. Expense(SGA) was $376 Mil.
Total Current Liabilities was $2,867 Mil.
Long-Term Debt was $3,240 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)|
|=||(1076.92307692 / 7421.71712757)||/||(801.656695812 / 7081.27610597)|
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)|
|=||(849.433978495 / 7081.27610597)||/||(675.731663685 / 7421.71712757)|
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 - (3289.35599284 + 2548.30053667) / 14639.9821109)||/||(1 - (3446.84767602 + 2738.15002301) / 13841.6935113)|
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))|
|=||(377.925441962 / (377.925441962 + 2738.15002301))||/||(358.182823269 / (358.182823269 + 2548.30053667))|
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)|
|=||(403.33577094 / 7421.71712757)||/||(376.274245344 / 7081.27610597)|
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)|
|=||((3173.97137746 + 3902.05724508) / 14639.9821109)||/||((3240.22089277 + 2867.46433502) / 13841.6935113)|
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|
|=||(1572.00501973 - 315.864748782||-||1647.93933044)||/||14639.9821109|
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 -2.36 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