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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 MercadoLibre Inc was 6.50. The lowest was -3.50. And the median was -2.42.
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 MercadoLibre Inc 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 * 0.7518||+||0.528 * 1.0738||+||0.404 * 0.8299||+||0.892 * 1.1552||+||0.115 * 1.0108|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9862||+||4.679 * -0.0516||-||0.327 * 1.0181|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $40.1 Mil.|
Revenue was 199.644 + 157.63 + 180.732 + 168.641 = $706.6 Mil.
Gross Profit was 126.298 + 102.182 + 117.57 + 111.828 = $457.9 Mil.
Total Current Assets was $673.3 Mil.
Total Assets was $1,140.1 Mil.
Property, Plant and Equipment(Net PPE) was $104.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $25.4 Mil.
Selling, General & Admin. Expense(SGA) was $216.8 Mil.
Total Current Liabilities was $422.4 Mil.
Long-Term Debt was $296.7 Mil.
Net Income was 15.858 + 30.247 + 38.965 + 45.64 = $130.7 Mil.
Non Operating Income was -5.387 + 5.147 + 17.772 + 2.57 = $20.1 Mil.
Cash Flow from Operations was 56.657 + -11.802 + 110.091 + 14.448 = $169.4 Mil.
|Accounts Receivable was $46.1 Mil.
Revenue was 154.314 + 148.103 + 161.37 + 147.935 = $611.7 Mil.
Gross Profit was 104.003 + 103.395 + 113.705 + 104.533 = $425.6 Mil.
Total Current Assets was $547.4 Mil.
Total Assets was $1,020.6 Mil.
Property, Plant and Equipment(Net PPE) was $82.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $20.3 Mil.
Selling, General & Admin. Expense(SGA) was $190.3 Mil.
Total Current Liabilities was $345.7 Mil.
Long-Term Debt was $286.5 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)|
|=||(40.055 / 706.647)||/||(46.123 / 611.722)|
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)|
|=||(425.636 / 611.722)||/||(457.878 / 706.647)|
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 - (673.267 + 104.808) / 1140.149)||/||(1 - (547.354 + 82.735) / 1020.635)|
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))|
|=||(20.334 / (20.334 + 82.735))||/||(25.417 / (25.417 + 104.808))|
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)|
|=||(216.818 / 706.647)||/||(190.315 / 611.722)|
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)|
|=||((296.691 + 422.355) / 1140.149)||/||((286.525 + 345.679) / 1020.635)|
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|
|=||(130.71 - 20.102||-||169.394)||/||1140.149|
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.
MercadoLibre Inc has a M-score of -2.84 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
MercadoLibre Inc Annual Data
MercadoLibre Inc Quarterly Data