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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 ArcelorMittal SA was 0.11. The lowest was -83.75. And the median was -2.64.
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 ArcelorMittal SA 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 * 1.1161||+||0.528 * -7.9984||+||0.404 * 0.9758||+||0.892 * 0.8291||+||0.115 * 0.4756|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0||+||4.679 * 0.0707||-||0.327 * 0.9332|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $3,412 Mil.|
Revenue was 14523 + 14743 + 13399 + 13981 = $56,646 Mil.
Gross Profit was 13830 + 14743 + 13399 + -48784 = $-6,812 Mil.
Total Current Assets was $20,969 Mil.
Total Assets was $75,035 Mil.
Property, Plant and Equipment(Net PPE) was $35,807 Mil.
Depreciation, Depletion and Amortization(DDA) was $7,599 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $16,519 Mil.
Long-Term Debt was $12,632 Mil.
Net Income was 680 + 1112 + -416 + -6686 = $-5,310 Mil.
Non Operating Income was -12740 + 160 + 333 + -997 = $-13,244 Mil.
Cash Flow from Operations was 876 + 869 + -690 + 1574 = $2,629 Mil.
|Accounts Receivable was $3,687 Mil.
Revenue was 15589 + 16890 + 17118 + 18723 = $68,320 Mil.
Gross Profit was 14785 + 16070 + 17118 + 17741 = $65,714 Mil.
Total Current Assets was $23,765 Mil.
Total Assets was $85,590 Mil.
Property, Plant and Equipment(Net PPE) was $40,480 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,677 Mil.
Selling, General & Admin. Expense(SGA) was $16,908 Mil.
Total Current Liabilities was $17,701 Mil.
Long-Term Debt was $17,932 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)|
|=||(3412 / 56646)||/||(3687 / 68320)|
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)|
|=||(65714 / 68320)||/||(-6812 / 56646)|
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 - (20969 + 35807) / 75035)||/||(1 - (23765 + 40480) / 85590)|
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))|
|=||(3677 / (3677 + 40480))||/||(7599 / (7599 + 35807))|
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)|
|=||(0 / 56646)||/||(16908 / 68320)|
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)|
|=||((12632 + 16519) / 75035)||/||((17932 + 17701) / 85590)|
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|
|=||(-5310 - -13244||-||2629)||/||75035|
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.
ArcelorMittal SA has a M-score of -6.82 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
ArcelorMittal SA Annual Data
ArcelorMittal SA Quarterly Data