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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 0.67. The lowest was -7.03. And the median was -2.58.
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 * 2.1926||+||0.528 * 0.5361||+||0.404 * 0.7888||+||0.892 * 0.5043||+||0.115 * 1.1214|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1522||+||4.679 * -0.0343||-||0.327 * 1.0483|
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $2,668 Mil.|
Revenue was 5531 + 5289 + 4481 + 5825 = $21,126 Mil.
Gross Profit was 1212 + 1285 + 1165 + 1090 = $4,752 Mil.
Total Current Assets was $5,481 Mil.
Total Assets was $67,927 Mil.
Property, Plant and Equipment(Net PPE) was $49,082 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,947 Mil.
Selling, General & Admin. Expense(SGA) was $312 Mil.
Total Current Liabilities was $6,182 Mil.
Long-Term Debt was $29,265 Mil.
Net Income was 74 + 370 + 311 + 46 = $801 Mil.
Non Operating Income was -219 + 65 + 23 + 43 = $-88 Mil.
Cash Flow from Operations was 1039 + 466 + 960 + 754 = $3,219 Mil.
|Accounts Receivable was $2,413 Mil.
Revenue was 6601 + 11540 + 10326 + 13427 = $41,894 Mil.
Gross Profit was 1141 + 1551 + 1220 + 1140 = $5,052 Mil.
Total Current Assets was $5,325 Mil.
Total Assets was $64,145 Mil.
Property, Plant and Equipment(Net PPE) was $42,821 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,914 Mil.
Selling, General & Admin. Expense(SGA) was $537 Mil.
Total Current Liabilities was $4,483 Mil.
Long-Term Debt was $27,449 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)|
|=||(2668 / 21126)||/||(2413 / 41894)|
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)|
|=||(5052 / 41894)||/||(4752 / 21126)|
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 - (5481 + 49082) / 67927)||/||(1 - (5325 + 42821) / 64145)|
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))|
|=||(1914 / (1914 + 42821))||/||(1947 / (1947 + 49082))|
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)|
|=||(312 / 21126)||/||(537 / 41894)|
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)|
|=||((29265 + 6182) / 67927)||/||((27449 + 4483) / 64145)|
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|
|=||(801 - -88||-||3219)||/||67927|
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 -2.34 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