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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 -3.36. 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 * 0.5201||+||0.528 * 1.0659||+||0.404 * 1.0251||+||0.892 * 1.1712||+||0.115 * 0.7056|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0058||+||4.679 * -0.1263||-||0.327 * 1.0381|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $28.4 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 $557.5 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 $325.0 Mil.
Long-Term Debt was $294.3 Mil.
Net Income was 38.964 + 45.64 + 19.463 + 1.721 = $105.8 Mil.
Non Operating Income was 17.772 + 2.57 + -0.648 + -8.57 = $11.1 Mil.
Cash Flow from Operations was 110.091 + 14.448 + 58.652 + 38.179 = $221.4 Mil.
|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 + 95.477 + 83.842 = $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.
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)|
|=||(28.428 / 651.79)||/||(46.672 / 556.536)|
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)|
|=||(111.828 / 556.536)||/||(117.57 / 651.79)|
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 - (557.463 + 81.633) / 1003.606)||/||(1 - (532.75 + 91.545) / 966.848)|
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))|
|=||(16.947 / (16.947 + 91.545))||/||(23.209 / (23.209 + 81.633))|
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)|
|=||(204.951 / 651.79)||/||(173.989 / 556.536)|
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)|
|=||((294.342 + 325.026) / 1003.606)||/||((282.184 + 292.623) / 966.848)|
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|
|=||(105.788 - 11.124||-||221.37)||/||1003.606|
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 -3.36 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