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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 Enbridge Energy Partners LP was 6.86. The lowest was -4.00. And the median was -2.47.
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 Enbridge Energy Partners LP 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 * 3.2972||+||0.528 * 0.6108||+||0.404 * 0.7557||+||0.892 * 0.7742||+||0.115 * 0.9559|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.3382||+||4.679 * -0.0614||-||0.327 * 1.0082|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $124 Mil.|
Revenue was 1267.7 + 1313.1 + 1428.6 + 2071.7 = $6,081 Mil.
Gross Profit was 672.3 + 586.1 + 585.1 + 846 = $2,690 Mil.
Total Current Assets was $563 Mil.
Total Assets was $18,407 Mil.
Property, Plant and Equipment(Net PPE) was $17,006 Mil.
Depreciation, Depletion and Amortization(DDA) was $517 Mil.
Selling, General & Admin. Expense(SGA) was $978 Mil.
Total Current Liabilities was $1,605 Mil.
Long-Term Debt was $7,170 Mil.
Net Income was 82.1 + -97.1 + 140.1 + 214.1 = $339 Mil.
Non Operating Income was 22.5 + 23.3 + 28.9 + 16.1 = $91 Mil.
Cash Flow from Operations was 407.4 + 266.4 + 380.5 + 325.1 = $1,379 Mil.
|Accounts Receivable was $49 Mil.
Revenue was 1942.3 + 1871.1 + 2079.6 + 1962 = $7,855 Mil.
Gross Profit was 594.5 + 518.9 + 535.5 + 472.9 = $2,122 Mil.
Total Current Assets was $888 Mil.
Total Assets was $16,947 Mil.
Property, Plant and Equipment(Net PPE) was $15,038 Mil.
Depreciation, Depletion and Amortization(DDA) was $436 Mil.
Selling, General & Admin. Expense(SGA) was $944 Mil.
Total Current Liabilities was $1,712 Mil.
Long-Term Debt was $6,302 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)|
|=||(123.8 / 6081.1)||/||(48.5 / 7855)|
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)|
|=||(586.1 / 7855)||/||(672.3 / 6081.1)|
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 - (562.6 + 17006.4) / 18406.9)||/||(1 - (888.1 + 15038.1) / 16947.1)|
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))|
|=||(436.4 / (436.4 + 15038.1))||/||(517 / (517 + 17006.4))|
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)|
|=||(978 / 6081.1)||/||(944 / 7855)|
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)|
|=||((7169.8 + 1605) / 18406.9)||/||((6301.9 + 1711.5) / 16947.1)|
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|
|=||(339.2 - 90.8||-||1379.4)||/||18406.9|
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.
Enbridge Energy Partners LP has a M-score of -1.23 signals that the company is likely to 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
Enbridge Energy Partners LP Annual Data
Enbridge Energy Partners LP Quarterly Data