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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 -1.62. The lowest was -3.19. And the median was -2.46.
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 * 1.5312||+||0.528 * 1.0146||+||0.404 * 1.5566||+||0.892 * 1.1776||+||0.115 * 0.5308|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9977||+||4.679 * -0.126||-||0.327 * 1.5538|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $46.7 Mil.|
Revenue was 161.37 + 147.935 + 131.849 + 115.382 = $556.5 Mil.
Gross Profit was 113.705 + 104.533 + 95.478 + 83.843 = $397.6 Mil.
Total Current Assets was $532.8 Mil.
Total Assets was $966.8 Mil.
Property, Plant and Equipment(Net PPE) was $91.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $16.9 Mil.
Selling, General & Admin. Expense(SGA) was $174.0 Mil.
Total Current Liabilities was $292.6 Mil.
Long-Term Debt was $282.2 Mil.
Net Income was 34.145 + 33.765 + -25.594 + 30.264 = $72.6 Mil.
Non Operating Income was 5.299 + 5.22 + -15.965 + 3.093 = $-2.4 Mil.
Cash Flow from Operations was 58.354 + 50.532 + 60.281 + 27.627 = $196.8 Mil.
|Accounts Receivable was $25.9 Mil.
Revenue was 134.63 + 123.055 + 112.183 + 102.726 = $472.6 Mil.
Gross Profit was 98.425 + 88.91 + 81.106 + 74.077 = $342.5 Mil.
Total Current Assets was $326.2 Mil.
Total Assets was $592.4 Mil.
Property, Plant and Equipment(Net PPE) was $131.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $11.9 Mil.
Selling, General & Admin. Expense(SGA) was $148.1 Mil.
Total Current Liabilities was $224.2 Mil.
Long-Term Debt was $2.5 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)|
|=||(46.672 / 556.536)||/||(25.884 / 472.594)|
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)|
|=||(104.533 / 472.594)||/||(113.705 / 556.536)|
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 - (532.75 + 91.545) / 966.848)||/||(1 - (326.164 + 131.372) / 592.363)|
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))|
|=||(11.878 / (11.878 + 131.372))||/||(16.947 / (16.947 + 91.545))|
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)|
|=||(173.992 / 556.536)||/||(148.092 / 472.594)|
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)|
|=||((282.184 + 292.622) / 966.848)||/||((2.49 + 224.166) / 592.363)|
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|
|=||(72.58 - -2.353||-||196.794)||/||966.848|
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 -2.42 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