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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 -2.52.
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 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 * 0.6997||+||0.528 * 0.6522||+||0.404 * 0.6749||+||0.892 * 0.6534||+||0.115 * 0.9582|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.5611||+||4.679 * -0.0497||-||0.327 * 1.0524|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $17 Mil.|
Revenue was 1061.6 + 1136.7 + 1267.7 + 1313.1 = $4,779 Mil.
Gross Profit was 623.9 + 667.1 + 672.3 + 586.1 = $2,549 Mil.
Total Current Assets was $472 Mil.
Total Assets was $18,827 Mil.
Property, Plant and Equipment(Net PPE) was $17,573 Mil.
Depreciation, Depletion and Amortization(DDA) was $549 Mil.
Selling, General & Admin. Expense(SGA) was $969 Mil.
Total Current Liabilities was $1,399 Mil.
Long-Term Debt was $7,998 Mil.
Net Income was 80 + 6.9 + 82.1 + -97.1 = $72 Mil.
Non Operating Income was 19.8 + 24.9 + 22.5 + 23.3 = $91 Mil.
Cash Flow from Operations was 266.3 + -23.5 + 407.4 + 266.4 = $917 Mil.
|Accounts Receivable was $37 Mil.
Revenue was 1428.6 + 2071.7 + 1942.3 + 1871.1 = $7,314 Mil.
Gross Profit was 585.1 + 846 + 594.5 + 518.9 = $2,545 Mil.
Total Current Assets was $787 Mil.
Total Assets was $18,057 Mil.
Property, Plant and Equipment(Net PPE) was $16,158 Mil.
Depreciation, Depletion and Amortization(DDA) was $483 Mil.
Selling, General & Admin. Expense(SGA) was $950 Mil.
Total Current Liabilities was $1,568 Mil.
Long-Term Debt was $6,996 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)|
|=||(17.1 / 4779.1)||/||(37.4 / 7313.7)|
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)|
|=||(2544.5 / 7313.7)||/||(2549.4 / 4779.1)|
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 - (472 + 17572.6) / 18827.2)||/||(1 - (786.7 + 16157.9) / 18056.7)|
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))|
|=||(482.8 / (482.8 + 16157.9))||/||(548.7 / (548.7 + 17572.6))|
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)|
|=||(969.2 / 4779.1)||/||(950.1 / 7313.7)|
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)|
|=||((7997.7 + 1399.1) / 18827.2)||/||((6995.5 + 1568.1) / 18056.7)|
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|
|=||(71.9 - 90.5||-||916.6)||/||18827.2|
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 -3.73 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
Enbridge Energy Partners LP Annual Data
Enbridge Energy Partners LP Quarterly Data