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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 * 1.8157||+||0.528 * 0.4988||+||0.404 * 0.8052||+||0.892 * 0.4419||+||0.115 * 1.0583|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.274||+||4.679 * -0.0333||-||0.327 * 1.0011|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $2,542 Mil.|
Revenue was 5289 + 4481 + 5825 + 6601 = $22,196 Mil.
Gross Profit was 1285 + 1165 + 1090 + 1141 = $4,681 Mil.
Total Current Assets was $5,329 Mil.
Total Assets was $66,041 Mil.
Property, Plant and Equipment(Net PPE) was $46,987 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,915 Mil.
Selling, General & Admin. Expense(SGA) was $335 Mil.
Total Current Liabilities was $5,359 Mil.
Long-Term Debt was $28,132 Mil.
Net Income was 370 + 311 + 46 + 417 = $1,144 Mil.
Non Operating Income was 65 + 23 + 43 + 172 = $303 Mil.
Cash Flow from Operations was 466 + 960 + 754 + 860 = $3,040 Mil.
|Accounts Receivable was $3,168 Mil.
Revenue was 11540 + 10326 + 13427 + 14933 = $50,226 Mil.
Gross Profit was 1551 + 1220 + 1140 + 1372 = $5,283 Mil.
Total Current Assets was $7,259 Mil.
Total Assets was $67,551 Mil.
Property, Plant and Equipment(Net PPE) was $42,857 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,853 Mil.
Selling, General & Admin. Expense(SGA) was $595 Mil.
Total Current Liabilities was $5,161 Mil.
Long-Term Debt was $29,058 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)|
|=||(2542 / 22196)||/||(3168 / 50226)|
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)|
|=||(5283 / 50226)||/||(4681 / 22196)|
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 - (5329 + 46987) / 66041)||/||(1 - (7259 + 42857) / 67551)|
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))|
|=||(1853 / (1853 + 42857))||/||(1915 / (1915 + 46987))|
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)|
|=||(335 / 22196)||/||(595 / 50226)|
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)|
|=||((28132 + 5359) / 66041)||/||((29058 + 5161) / 67551)|
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|
|=||(1144 - 303||-||3040)||/||66041|
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 -2.77 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