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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 -1.15. The lowest was -3.53. 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 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 * 0.8623||+||0.528 * 0.6836||+||0.404 * 1.7011||+||0.892 * 0.6107||+||0.115 * 0.9647|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.6905||+||4.679 * -0.0317||-||0.327 * 0.9187|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $2,802 Mil.|
Revenue was 6307.9 + 7092.5 + 7472.5 + 10190.3 = $31,063 Mil.
Gross Profit was 855.3 + 735 + 856.1 + 904.2 = $3,351 Mil.
Total Current Assets was $4,660 Mil.
Total Assets was $48,528 Mil.
Property, Plant and Equipment(Net PPE) was $31,214 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,516 Mil.
Selling, General & Admin. Expense(SGA) was $207 Mil.
Total Current Liabilities was $6,879 Mil.
Long-Term Debt was $20,841 Mil.
Net Income was 649.3 + 551 + 636.1 + 659.8 = $2,496 Mil.
Non Operating Income was -2.5 + -11.2 + 0.5 + 0.8 = $-12 Mil.
Cash Flow from Operations was 689.6 + 947.6 + 954 + 1457.8 = $4,049 Mil.
|Accounts Receivable was $5,321 Mil.
Revenue was 12330.2 + 12520.8 + 12909.9 + 13101.3 = $50,862 Mil.
Gross Profit was 915.4 + 881.7 + 1029.4 + 923.7 = $3,750 Mil.
Total Current Assets was $8,366 Mil.
Total Assets was $42,906 Mil.
Property, Plant and Equipment(Net PPE) was $27,963 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,308 Mil.
Selling, General & Admin. Expense(SGA) was $200 Mil.
Total Current Liabilities was $8,972 Mil.
Long-Term Debt was $17,707 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)|
|=||(2802 / 31063.2)||/||(5320.8 / 50862.2)|
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)|
|=||(735 / 50862.2)||/||(855.3 / 31063.2)|
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 - (4660 + 31214.1) / 48527.8)||/||(1 - (8365.5 + 27963.3) / 42905.5)|
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))|
|=||(1307.7 / (1307.7 + 27963.3))||/||(1515.8 / (1515.8 + 31214.1))|
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)|
|=||(206.8 / 31063.2)||/||(200.3 / 50862.2)|
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)|
|=||((20840.7 + 6878.9) / 48527.8)||/||((17706.5 + 8971.8) / 42905.5)|
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|
|=||(2496.2 - -12.4||-||4049)||/||48527.8|
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 -3.08 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