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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 13.44. The lowest was -7.59. 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 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 * 0.8398||+||0.528 * -0.8034||+||0.404 * 1.0259||+||0.892 * 1.0191||+||0.115 * 1.0472|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * -4.0482||+||4.679 * -0.0477||-||0.327 * 1.0312|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $4,940 Mil.|
Revenue was 20067 + 20704 + 19788 + 19848 = $80,407 Mil.
Gross Profit was 19121 + 19773 + 18708 + -51827 = $5,775 Mil.
Total Current Assets was $30,103 Mil.
Total Assets was $104,073 Mil.
Property, Plant and Equipment(Net PPE) was $48,162 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,080 Mil.
Selling, General & Admin. Expense(SGA) was $3,519 Mil.
Total Current Liabilities was $22,764 Mil.
Long-Term Debt was $17,487 Mil.
Net Income was 22 + 52 + -205 + -1227 = $-1,358 Mil.
Non Operating Income was -603 + -209 + -344 + 501 = $-655 Mil.
Cash Flow from Operations was 501 + 1548 + -471 + 2687 = $4,265 Mil.
|Accounts Receivable was $5,772 Mil.
Revenue was 19643 + 20197 + 19752 + 19309 = $78,901 Mil.
Gross Profit was 18407 + 19022 + 18591 + -60573 = $-4,553 Mil.
Total Current Assets was $32,503 Mil.
Total Assets was $111,166 Mil.
Property, Plant and Equipment(Net PPE) was $51,792 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,613 Mil.
Selling, General & Admin. Expense(SGA) was $-853 Mil.
Total Current Liabilities was $23,224 Mil.
Long-Term Debt was $18,469 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)|
|=||(4940 / 80407)||/||(5772 / 78901)|
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)|
|=||(19773 / 78901)||/||(19121 / 80407)|
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 - (30103 + 48162) / 104073)||/||(1 - (32503 + 51792) / 111166)|
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))|
|=||(4613 / (4613 + 51792))||/||(4080 / (4080 + 48162))|
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)|
|=||(3519 / 80407)||/||(-853 / 78901)|
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)|
|=||((17487 + 22764) / 104073)||/||((18469 + 23224) / 111166)|
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|
|=||(-1358 - -655||-||4265)||/||104073|
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 -2.91 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