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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 * 0.4687||+||0.528 * 1.0704||+||0.404 * 0.8859||+||0.892 * 1.2157||+||0.115 * 1.1372|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9786||+||4.679 * -0.1166||-||0.327 * 1.0259|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $31.1 Mil.|
Revenue was 230.847 + 199.644 + 157.63 + 180.732 = $768.9 Mil.
Gross Profit was 145.648 + 126.298 + 102.182 + 117.57 = $491.7 Mil.
Total Current Assets was $759.1 Mil.
Total Assets was $1,256.1 Mil.
Property, Plant and Equipment(Net PPE) was $121.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $27.0 Mil.
Selling, General & Admin. Expense(SGA) was $233.2 Mil.
Total Current Liabilities was $496.3 Mil.
Long-Term Debt was $299.5 Mil.
Net Income was 38.912 + 15.858 + 30.247 + 38.965 = $124.0 Mil.
Non Operating Income was -4.823 + -5.387 + 5.147 + 17.772 = $12.7 Mil.
Cash Flow from Operations was 102.827 + 56.657 + -11.802 + 110.091 = $257.8 Mil.
|Accounts Receivable was $54.6 Mil.
Revenue was 168.641 + 154.314 + 148.103 + 161.37 = $632.4 Mil.
Gross Profit was 111.828 + 104.003 + 103.395 + 113.705 = $432.9 Mil.
Total Current Assets was $625.2 Mil.
Total Assets was $1,068.8 Mil.
Property, Plant and Equipment(Net PPE) was $82.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.6 Mil.
Selling, General & Admin. Expense(SGA) was $196.0 Mil.
Total Current Liabilities was $367.3 Mil.
Long-Term Debt was $292.7 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)|
|=||(31.086 / 768.853)||/||(54.551 / 632.428)|
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)|
|=||(432.931 / 632.428)||/||(491.698 / 768.853)|
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 - (759.107 + 121.006) / 1256.057)||/||(1 - (625.214 + 82.51) / 1068.828)|
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))|
|=||(21.557 / (21.557 + 82.51))||/||(26.951 / (26.951 + 121.006))|
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)|
|=||(233.185 / 768.853)||/||(196.009 / 632.428)|
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)|
|=||((299.472 + 496.313) / 1256.057)||/||((292.726 + 367.311) / 1068.828)|
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|
|=||(123.982 - 12.709||-||257.773)||/||1256.057|
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 -3.32 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