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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 -3.31. And the median was -2.45.
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 * 0.7645||+||0.528 * 1.054||+||0.404 * 0.7279||+||0.892 * 1.2955||+||0.115 * 1.1692|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9175||+||4.679 * -0.0353||-||0.327 * 1.0454|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $30.6 Mil.|
Revenue was 256.275 + 230.847 + 199.644 + 157.63 = $844.4 Mil.
Gross Profit was 162.73 + 145.648 + 126.298 + 102.182 = $536.9 Mil.
Total Current Assets was $869.5 Mil.
Total Assets was $1,367.4 Mil.
Property, Plant and Equipment(Net PPE) was $124.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $29.0 Mil.
Selling, General & Admin. Expense(SGA) was $243.6 Mil.
Total Current Liabilities was $576.6 Mil.
Long-Term Debt was $301.9 Mil.
Net Income was 51.349 + 38.912 + 15.858 + 30.247 = $136.4 Mil.
Non Operating Income was -0.503 + -4.823 + -5.387 + 5.147 = $-5.6 Mil.
Cash Flow from Operations was 42.577 + 102.827 + 56.657 + -11.802 = $190.3 Mil.
|Accounts Receivable was $30.9 Mil.
Revenue was 180.732 + 168.641 + 154.314 + 148.103 = $651.8 Mil.
Gross Profit was 117.57 + 111.828 + 104.003 + 103.395 = $436.8 Mil.
Total Current Assets was $545.2 Mil.
Total Assets was $1,003.6 Mil.
Property, Plant and Equipment(Net PPE) was $81.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $23.2 Mil.
Selling, General & Admin. Expense(SGA) was $205.0 Mil.
Total Current Liabilities was $322.5 Mil.
Long-Term Debt was $294.3 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)|
|=||(30.582 / 844.396)||/||(30.878 / 651.79)|
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)|
|=||(436.796 / 651.79)||/||(536.858 / 844.396)|
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 - (869.461 + 124.261) / 1367.435)||/||(1 - (545.173 + 81.633) / 1003.606)|
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))|
|=||(23.209 / (23.209 + 81.633))||/||(29.022 / (29.022 + 124.261))|
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)|
|=||(243.605 / 844.396)||/||(204.951 / 651.79)|
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)|
|=||((301.94 + 576.601) / 1367.435)||/||((294.342 + 322.475) / 1003.606)|
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|
|=||(136.366 - -5.566||-||190.259)||/||1367.435|
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 -2.66 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
MercadoLibre Inc Annual Data
MercadoLibre Inc Quarterly Data