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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 0.72. The lowest was -7.03. And the median was -2.40.
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 * 0.7764||+||0.528 * 1.0241||+||0.404 * 1.0261||+||0.892 * 1.104||+||0.115 * 1.0451|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.7905||+||4.679 * -0.0301||-||0.327 * 0.9809|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $2,879 Mil.|
Revenue was 12279 + 13618 + 13029 + 12232 = $51,158 Mil.
Gross Profit was 757 + 1093 + 1085 + 1047 = $3,982 Mil.
Total Current Assets was $5,439 Mil.
Total Assets was $48,221 Mil.
Property, Plant and Equipment(Net PPE) was $29,743 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,130 Mil.
Selling, General & Admin. Expense(SGA) was $377 Mil.
Total Current Liabilities was $6,040 Mil.
Long-Term Debt was $18,332 Mil.
Net Income was 108 + 342 + 471 + 415 = $1,336 Mil.
Non Operating Income was -48 + 43 + 90 + 144 = $229 Mil.
Cash Flow from Operations was 564 + 421 + 891 + 682 = $2,558 Mil.
|Accounts Receivable was $3,359 Mil.
Revenue was 12032 + 11902 + 11551 + 10854 = $46,339 Mil.
Gross Profit was 865 + 901 + 995 + 933 = $3,694 Mil.
Total Current Assets was $6,239 Mil.
Total Assets was $43,702 Mil.
Property, Plant and Equipment(Net PPE) was $25,947 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,032 Mil.
Selling, General & Admin. Expense(SGA) was $432 Mil.
Total Current Liabilities was $6,067 Mil.
Long-Term Debt was $16,451 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)|
|=||(2879 / 51158)||/||(3359 / 46339)|
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)|
|=||(1093 / 46339)||/||(757 / 51158)|
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 - (5439 + 29743) / 48221)||/||(1 - (6239 + 25947) / 43702)|
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))|
|=||(1032 / (1032 + 25947))||/||(1130 / (1130 + 29743))|
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)|
|=||(377 / 51158)||/||(432 / 46339)|
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)|
|=||((18332 + 6040) / 48221)||/||((16451 + 6067) / 43702)|
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|
|=||(1336 - 229||-||2558)||/||48221|
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 -2.66 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