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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 Enterprise Products Partners LP was -1.46. The lowest was -3.49. And the median was -2.38.
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 Enterprise Products 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 * 0.6949||+||0.528 * 0.9394||+||0.404 * 1.6202||+||0.892 * 1.0047||+||0.115 * 0.9928|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1338||+||4.679 * -0.0292||-||0.327 * 0.9416|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $3,823 Mil.|
Revenue was 10190.3 + 12330.2 + 12520.8 + 12909.9 = $47,951 Mil.
Gross Profit was 904.2 + 915.4 + 881.7 + 1029.4 = $3,731 Mil.
Total Current Assets was $5,491 Mil.
Total Assets was $47,101 Mil.
Property, Plant and Equipment(Net PPE) was $29,882 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,361 Mil.
Selling, General & Admin. Expense(SGA) was $215 Mil.
Total Current Liabilities was $7,874 Mil.
Long-Term Debt was $19,157 Mil.
Net Income was 659.8 + 691.1 + 637.7 + 798.8 = $2,787 Mil.
Non Operating Income was 1.9 + -1.3 + 0.6 + -0.6 = $1 Mil.
Cash Flow from Operations was 1457.8 + 832.5 + 467.8 + 1404.1 = $4,162 Mil.
|Accounts Receivable was $5,476 Mil.
Revenue was 13101.3 + 12093.3 + 11149.3 + 11383.1 = $47,727 Mil.
Gross Profit was 923.7 + 819.8 + 782.1 + 962.7 = $3,488 Mil.
Total Current Assets was $7,023 Mil.
Total Assets was $40,139 Mil.
Property, Plant and Equipment(Net PPE) was $26,947 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,218 Mil.
Selling, General & Admin. Expense(SGA) was $188 Mil.
Total Current Liabilities was $8,239 Mil.
Long-Term Debt was $16,227 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)|
|=||(3823 / 47951.2)||/||(5475.5 / 47727)|
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)|
|=||(915.4 / 47727)||/||(904.2 / 47951.2)|
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 - (5490.7 + 29881.6) / 47100.7)||/||(1 - (7023.4 + 26946.6) / 40138.7)|
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))|
|=||(1217.6 / (1217.6 + 26946.6))||/||(1360.5 / (1360.5 + 29881.6))|
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)|
|=||(214.5 / 47951.2)||/||(188.3 / 47727)|
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)|
|=||((19157.4 + 7873.7) / 47100.7)||/||((16226.5 + 8238.7) / 40138.7)|
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|
|=||(2787.4 - 0.6||-||4162.2)||/||47100.7|
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.
Enterprise Products Partners LP has a M-score of -2.68 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
Enterprise Products Partners LP Annual Data
Enterprise Products Partners LP Quarterly Data