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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 3.15. The lowest was -3.79. And the median was -2.42.
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 * 0.8357||+||0.528 * 0.7835||+||0.404 * 0.8805||+||0.892 * 1.1191||+||0.115 * 1.0082|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9243||+||4.679 * -0.0288||-||0.327 * 1.0193|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $46 Mil.|
Revenue was 2071.7 + 1942.3 + 1871.1 + 2079.6 = $7,965 Mil.
Gross Profit was 846 + 594.5 + 518.9 + 535.5 = $2,495 Mil.
Total Current Assets was $955 Mil.
Total Assets was $17,747 Mil.
Property, Plant and Equipment(Net PPE) was $15,693 Mil.
Depreciation, Depletion and Amortization(DDA) was $458 Mil.
Selling, General & Admin. Expense(SGA) was $950 Mil.
Total Current Liabilities was $1,916 Mil.
Long-Term Debt was $6,675 Mil.
Net Income was 214.1 + 20.5 + 43.9 + 93.3 = $372 Mil.
Non Operating Income was 16.1 + 16.3 + 13.8 + 19.9 = $66 Mil.
Cash Flow from Operations was 325.1 + 132.1 + 148.8 + 210.8 = $817 Mil.
|Accounts Receivable was $49 Mil.
Revenue was 1962 + 1789.4 + 1672.7 + 1693 = $7,117 Mil.
Gross Profit was 446.2 + 488.3 + 522.8 + 289.5 = $1,747 Mil.
Total Current Assets was $677 Mil.
Total Assets was $14,902 Mil.
Property, Plant and Equipment(Net PPE) was $13,177 Mil.
Depreciation, Depletion and Amortization(DDA) was $388 Mil.
Selling, General & Admin. Expense(SGA) was $918 Mil.
Total Current Liabilities was $1,993 Mil.
Long-Term Debt was $5,083 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)|
|=||(46.2 / 7964.7)||/||(49.4 / 7117.1)|
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)|
|=||(594.5 / 7117.1)||/||(846 / 7964.7)|
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 - (955.4 + 15692.7) / 17746.9)||/||(1 - (676.8 + 13176.8) / 14901.5)|
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))|
|=||(388 / (388 + 13176.8))||/||(458.2 / (458.2 + 15692.7))|
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)|
|=||(950 / 7964.7)||/||(918.4 / 7117.1)|
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)|
|=||((6675.2 + 1915.9) / 17746.9)||/||((5083.4 + 1993.4) / 14901.5)|
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|
|=||(371.8 - 66.1||-||816.8)||/||17746.9|
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 -2.81 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