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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.
ArcelorMittal SA has a M-score of -3.98 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of ArcelorMittal SA was 2.55. The lowest was -5.29. And the median was -2.41.
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 * 0.9252||+||0.528 * -0.5072||+||0.404 * 1.0209||+||0.892 * 0.978||+||0.115 * 0.9796|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 3.17||+||4.679 * -0.0532||-||0.327 * 1.0088|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $5,547 Mil.|
Revenue was 19788 + 19848 + 19643 + 20197 = $79,476 Mil.
Gross Profit was 18708 + -51827 + 18407 + 19022 = $4,310 Mil.
Total Current Assets was $33,523 Mil.
Total Assets was $111,348 Mil.
Property, Plant and Equipment(Net PPE) was $50,876 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,614 Mil.
Selling, General & Admin. Expense(SGA) was $2,843 Mil.
Total Current Liabilities was $25,390 Mil.
Long-Term Debt was $18,226 Mil.
Net Income was -205 + -1227 + -193 + -780 = $-2,405 Mil.
Non Operating Income was -344 + 501 + -216 + -554 = $-613 Mil.
Cash Flow from Operations was -471 + 2687 + -448 + 2359 = $4,127 Mil.
|Accounts Receivable was $6,130 Mil.
Revenue was 19752 + 19309 + 19723 + 22478 = $81,262 Mil.
Gross Profit was 18591 + -60573 + 18431 + 21316 = $-2,235 Mil.
Total Current Assets was $35,815 Mil.
Total Assets was $115,767 Mil.
Property, Plant and Equipment(Net PPE) was $52,507 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,656 Mil.
Selling, General & Admin. Expense(SGA) was $917 Mil.
Total Current Liabilities was $23,208 Mil.
Long-Term Debt was $21,745 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)|
|=||(5547 / 79476)||/||(6130 / 81262)|
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)|
|=||(-51827 / 81262)||/||(18708 / 79476)|
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 - (33523 + 50876) / 111348)||/||(1 - (35815 + 52507) / 115767)|
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))|
|=||(4656 / (4656 + 52507))||/||(4614 / (4614 + 50876))|
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)|
|=||(2843 / 79476)||/||(917 / 81262)|
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)|
|=||((18226 + 25390) / 111348)||/||((21745 + 23208) / 115767)|
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|
|=||(-2405 - -613||-||4127)||/||111348|
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 -3.98 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