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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 4.35. The lowest was -30.35. And the median was -2.48.
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 * 1.5661||+||0.528 * 0.5504||+||0.404 * 0.8485||+||0.892 * 0.539||+||0.115 * 1.3946|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.432||+||4.679 * -0.0334||-||0.327 * 0.9991|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $2,080 Mil.|
Revenue was 4481 + 5825 + 6601 + 11540 = $28,447 Mil.
Gross Profit was 1165 + 1090 + 1141 + 1551 = $4,947 Mil.
Total Current Assets was $4,759 Mil.
Total Assets was $64,315 Mil.
Property, Plant and Equipment(Net PPE) was $45,787 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,920 Mil.
Selling, General & Admin. Expense(SGA) was $423 Mil.
Total Current Liabilities was $4,911 Mil.
Long-Term Debt was $26,992 Mil.
Net Income was 311 + 46 + 417 + 654 = $1,428 Mil.
Non Operating Income was 23 + 43 + 172 + 228 = $466 Mil.
Cash Flow from Operations was 960 + 754 + 860 + 533 = $3,107 Mil.
|Accounts Receivable was $2,464 Mil.
Revenue was 10326 + 13427 + 14933 + 14088 = $52,774 Mil.
Gross Profit was 1220 + 1140 + 1372 + 1319 = $5,051 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 $1,882 Mil.
Selling, General & Admin. Expense(SGA) was $548 Mil.
Total Current Liabilities was $4,707 Mil.
Long-Term Debt was $20,430 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)|
|=||(2080 / 28447)||/||(2464 / 52774)|
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)|
|=||(1090 / 52774)||/||(1165 / 28447)|
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 - (4759 + 45787) / 64315)||/||(1 - (6206 + 31649) / 50629)|
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))|
|=||(1882 / (1882 + 31649))||/||(1920 / (1920 + 45787))|
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)|
|=||(423 / 28447)||/||(548 / 52774)|
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)|
|=||((26992 + 4911) / 64315)||/||((20430 + 4707) / 50629)|
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|
|=||(1428 - 466||-||3107)||/||64315|
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 -2.85 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