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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 -1.06. The lowest was -3.50. And the median was -2.34.
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 * 0.5258||+||0.528 * 1.0256||+||0.404 * 1.4588||+||0.892 * 1.2143||+||0.115 * 0.4584|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9952||+||4.679 * -0.1528||-||0.327 * 1.589|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $54.1 Mil.|
Revenue was 148.103 + 161.37 + 147.935 + 131.849 = $589.3 Mil.
Gross Profit was 103.395 + 113.705 + 104.533 + 95.478 = $417.1 Mil.
Total Current Assets was $588.2 Mil.
Total Assets was $976.8 Mil.
Property, Plant and Equipment(Net PPE) was $75.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.5 Mil.
Selling, General & Admin. Expense(SGA) was $180.7 Mil.
Total Current Liabilities was $323.2 Mil.
Long-Term Debt was $286.2 Mil.
Net Income was 1.721 + 34.145 + 33.765 + -25.594 = $44.0 Mil.
Non Operating Income was -8.57 + 5.299 + 5.22 + -15.965 = $-14.0 Mil.
Cash Flow from Operations was 38.179 + 58.354 + 50.532 + 60.279 = $207.3 Mil.
|Accounts Receivable was $84.7 Mil.
Revenue was 115.382 + 134.63 + 123.055 + 112.183 = $485.3 Mil.
Gross Profit was 83.842 + 98.425 + 88.91 + 81.106 = $352.3 Mil.
Total Current Assets was $337.2 Mil.
Total Assets was $597.9 Mil.
Property, Plant and Equipment(Net PPE) was $129.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.8 Mil.
Selling, General & Admin. Expense(SGA) was $149.6 Mil.
Total Current Liabilities was $226.8 Mil.
Long-Term Debt was $7.9 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)|
|=||(54.054 / 589.257)||/||(84.654 / 485.25)|
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)|
|=||(113.705 / 485.25)||/||(103.395 / 589.257)|
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 - (588.175 + 75.945) / 976.783)||/||(1 - (337.211 + 129.465) / 597.859)|
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))|
|=||(12.776 / (12.776 + 129.465))||/||(18.509 / (18.509 + 75.945))|
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)|
|=||(180.744 / 589.257)||/||(149.553 / 485.25)|
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)|
|=||((286.18 + 323.16) / 976.783)||/||((7.867 + 226.84) / 597.859)|
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|
|=||(44.037 - -14.016||-||207.344)||/||976.783|
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 -3.50 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