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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 -2.40.
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 * 0.3635||+||0.528 * 1.0541||+||0.404 * 1.1119||+||0.892 * 1.1937||+||0.115 * 0.7579|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.038||+||4.679 * -0.063||-||0.327 * 1.025|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|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.
Net Income was 45.64 + 19.463 + 1.721 + 34.146 = $101.0 Mil.
Non Operating Income was 2.57 + -0.648 + -8.57 + 5.299 = $-1.3 Mil.
Cash Flow from Operations was 14.448 + 58.652 + 38.179 + 58.354 = $169.6 Mil.
|Accounts Receivable was $125.7 Mil.
Revenue was 147.935 + 131.849 + 115.382 + 134.63 = $529.8 Mil.
Gross Profit was 104.533 + 95.477 + 83.842 + 98.425 = $382.3 Mil.
Total Current Assets was $569.9 Mil.
Total Assets was $939.2 Mil.
Property, Plant and Equipment(Net PPE) was $83.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $15.6 Mil.
Selling, General & Admin. Expense(SGA) was $158.2 Mil.
Total Current Liabilities was $282.9 Mil.
Long-Term Debt was $282.9 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)|
|=||(54.551 / 632.428)||/||(125.712 / 529.796)|
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)|
|=||(104.003 / 529.796)||/||(111.828 / 632.428)|
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 - (625.214 + 82.51) / 1068.828)||/||(1 - (569.892 + 83.927) / 939.199)|
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))|
|=||(15.631 / (15.631 + 83.927))||/||(21.557 / (21.557 + 82.51))|
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)|
|=||(196.01 / 632.428)||/||(158.184 / 529.796)|
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)|
|=||((292.726 + 367.311) / 1068.828)||/||((282.946 + 282.916) / 939.199)|
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|
|=||(100.97 - -1.349||-||169.633)||/||1068.828|
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 -3.16 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