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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 Energy Transfer Partners LP was 4.39. The lowest was -30.34. And the median was -2.33.
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 Energy Transfer 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 * 0.6129||+||0.528 * 0.9771||+||0.404 * 1.0051||+||0.892 * 1.0155||+||0.115 * 1.0797|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0248||+||4.679 * -0.0243||-||0.327 * 0.9138|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $2,464 Mil.|
Revenue was 9530 + 12279 + 13618 + 13029 = $48,456 Mil.
Gross Profit was 1005 + 757 + 1093 + 1085 = $3,940 Mil.
Total Current Assets was $6,206 Mil.
Total Assets was $50,629 Mil.
Property, Plant and Equipment(Net PPE) was $31,649 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,186 Mil.
Selling, General & Admin. Expense(SGA) was $384 Mil.
Total Current Liabilities was $4,707 Mil.
Long-Term Debt was $20,430 Mil.
Net Income was 281 + 108 + 342 + 471 = $1,202 Mil.
Non Operating Income was -34 + -48 + 43 + 90 = $51 Mil.
Cash Flow from Operations was 506 + 564 + 421 + 891 = $2,382 Mil.
|Accounts Receivable was $3,959 Mil.
Revenue was 12232 + 12032 + 11902 + 11551 = $47,717 Mil.
Gross Profit was 1030 + 865 + 901 + 995 = $3,791 Mil.
Total Current Assets was $7,069 Mil.
Total Assets was $43,589 Mil.
Property, Plant and Equipment(Net PPE) was $25,578 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,038 Mil.
Selling, General & Admin. Expense(SGA) was $369 Mil.
Total Current Liabilities was $7,491 Mil.
Long-Term Debt was $16,191 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)|
|=||(2464 / 48456)||/||(3959 / 47717)|
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)|
|=||(757 / 47717)||/||(1005 / 48456)|
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 - (6206 + 31649) / 50629)||/||(1 - (7069 + 25578) / 43589)|
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))|
|=||(1038 / (1038 + 25578))||/||(1186 / (1186 + 31649))|
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)|
|=||(384 / 48456)||/||(369 / 47717)|
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)|
|=||((20430 + 4707) / 50629)||/||((16191 + 7491) / 43589)|
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|
|=||(1202 - 51||-||2382)||/||50629|
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.
Energy Transfer Partners LP has a M-score of -2.91 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
Energy Transfer Partners LP Annual Data
Energy Transfer Partners LP Quarterly Data