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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 -1.14. The lowest was -3.12. And the median was -2.44.
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 * 1.4668||+||0.528 * 0.6204||+||0.404 * 1.0393||+||0.892 * 0.6225||+||0.115 * 1.0891|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.3714||+||4.679 * -0.0265||-||0.327 * 0.9914|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $3,055 Mil.|
Revenue was 5617.8 + 5005.3 + 6155 + 6307.9 = $23,086 Mil.
Gross Profit was 795.6 + 858.4 + 912.8 + 855.3 = $3,422 Mil.
Total Current Assets was $5,970 Mil.
Total Assets was $51,401 Mil.
Property, Plant and Equipment(Net PPE) was $33,012 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,505 Mil.
Selling, General & Admin. Expense(SGA) was $177 Mil.
Total Current Liabilities was $7,026 Mil.
Long-Term Debt was $21,922 Mil.
Net Income was 558.5 + 661.2 + 684.8 + 649.3 = $2,554 Mil.
Non Operating Income was -22.9 + 3.6 + -9.3 + -2.5 = $-31 Mil.
Cash Flow from Operations was 945.5 + 899.7 + 1411.2 + 689.6 = $3,946 Mil.
|Accounts Receivable was $3,346 Mil.
Revenue was 7092.5 + 7472.5 + 10190.3 + 12330.2 = $37,086 Mil.
Gross Profit was 735 + 856.1 + 904.2 + 915.4 = $3,411 Mil.
Total Current Assets was $7,179 Mil.
Total Assets was $48,159 Mil.
Property, Plant and Equipment(Net PPE) was $29,784 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,484 Mil.
Selling, General & Admin. Expense(SGA) was $208 Mil.
Total Current Liabilities was $6,466 Mil.
Long-Term Debt was $20,893 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)|
|=||(3055.4 / 23086)||/||(3346.1 / 37085.5)|
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)|
|=||(3410.7 / 37085.5)||/||(3422.1 / 23086)|
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 - (5969.7 + 33011.5) / 51400.8)||/||(1 - (7178.8 + 29783.8) / 48159.4)|
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))|
|=||(1484.4 / (1484.4 + 29783.8))||/||(1504.5 / (1504.5 + 33011.5))|
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)|
|=||(177.4 / 23086)||/||(207.8 / 37085.5)|
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)|
|=||((21922.1 + 7026) / 51400.8)||/||((20892.9 + 6466.1) / 48159.4)|
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|
|=||(2553.8 - -31.1||-||3946)||/||51400.8|
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 -2.75 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