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Beneish M-Score -0.71 higher than -2.22, which implies that it might have manipulated its financial results.
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 -0.31. The lowest was -3.09. And the median was -2.37.
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 * 0.758||+||0.528 * 0.6916||+||0.404 * 1.0322||+||0.892 * 0.998||+||0.115 * 1.0742|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.99||+||4.679 * -0.0482||-||0.327 * 1.0006|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $3,696 Mil.|
Revenue was 18723 + 20067 + 20704 + 19788 = $79,282 Mil.
Gross Profit was -51608 + 19121 + 19773 + 18708 = $5,994 Mil.
Total Current Assets was $28,057 Mil.
Total Assets was $99,179 Mil.
Property, Plant and Equipment(Net PPE) was $46,465 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,939 Mil.
Selling, General & Admin. Expense(SGA) was $2,960 Mil.
Total Current Liabilities was $21,123 Mil.
Long-Term Debt was $17,275 Mil.
Net Income was -955 + 22 + 52 + -205 = $-1,086 Mil.
Non Operating Income was 984 + -603 + -209 + -344 = $-172 Mil.
Cash Flow from Operations was 2292 + 501 + 1548 + -471 = $3,870 Mil.
|Accounts Receivable was $4,886 Mil.
Revenue was 19848 + 19643 + 20197 + 19752 = $79,440 Mil.
Gross Profit was -51967 + 18508 + 19022 + 18591 = $4,154 Mil.
Total Current Assets was $34,025 Mil.
Total Assets was $112,308 Mil.
Property, Plant and Equipment(Net PPE) was $51,232 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,695 Mil.
Selling, General & Admin. Expense(SGA) was $2,996 Mil.
Total Current Liabilities was $25,235 Mil.
Long-Term Debt was $18,219 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)|
|=||(3696 / 79282)||/||(4886 / 79440)|
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)|
|=||(19121 / 79440)||/||(-51608 / 79282)|
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 - (28057 + 46465) / 99179)||/||(1 - (34025 + 51232) / 112308)|
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))|
|=||(4695 / (4695 + 51232))||/||(3939 / (3939 + 46465))|
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)|
|=||(2960 / 79282)||/||(2996 / 79440)|
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)|
|=||((17275 + 21123) / 99179)||/||((18219 + 25235) / 112308)|
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|
|=||(-1086 - -172||-||3870)||/||99179|
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 -3.07 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