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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 -1.44. The lowest was -3.13. And the median was -2.37.
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 * 1.521||+||0.528 * 0.8469||+||0.404 * 0.9278||+||0.892 * 0.8518||+||0.115 * 1.0145|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9759||+||4.679 * -0.0294||-||0.327 * 0.9863|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $3,330 Mil.|
Revenue was 6478.8 + 5920.4 + 5617.8 + 5005.3 = $23,022 Mil.
Gross Profit was 870.1 + 854.7 + 795.6 + 858.4 = $3,379 Mil.
Total Current Assets was $6,528 Mil.
Total Assets was $52,194 Mil.
Property, Plant and Equipment(Net PPE) was $33,293 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,552 Mil.
Selling, General & Admin. Expense(SGA) was $160 Mil.
Total Current Liabilities was $8,251 Mil.
Long-Term Debt was $21,121 Mil.
Net Income was 658.8 + 634.6 + 558.5 + 661.2 = $2,513 Mil.
Non Operating Income was 3.8 + -6.2 + -22.9 + 3.6 = $-22 Mil.
Cash Flow from Operations was 1407.8 + 813.8 + 945.5 + 899.7 = $4,067 Mil.
|Accounts Receivable was $2,570 Mil.
Revenue was 6155 + 6307.9 + 7092.5 + 7472.5 = $27,028 Mil.
Gross Profit was 912.8 + 855.3 + 735 + 856.1 = $3,359 Mil.
Total Current Assets was $4,298 Mil.
Total Assets was $48,802 Mil.
Property, Plant and Equipment(Net PPE) was $32,035 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,516 Mil.
Selling, General & Admin. Expense(SGA) was $193 Mil.
Total Current Liabilities was $7,167 Mil.
Long-Term Debt was $20,677 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)|
|=||(3329.5 / 23022.3)||/||(2569.9 / 27027.9)|
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)|
|=||(3359.2 / 27027.9)||/||(3378.8 / 23022.3)|
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 - (6528.2 + 33292.5) / 52194)||/||(1 - (4298.3 + 32034.7) / 48802.2)|
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))|
|=||(1516 / (1516 + 32034.7))||/||(1552 / (1552 + 33292.5))|
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)|
|=||(160.1 / 23022.3)||/||(192.6 / 27027.9)|
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)|
|=||((21120.9 + 8250.5) / 52194)||/||((20676.9 + 7166.6) / 48802.2)|
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|
|=||(2513.1 - -21.7||-||4066.8)||/||52194|
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 -2.37 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