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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 * 1.0006||+||0.528 * -10.9358||+||0.404 * 0.9668||+||0.892 * 0.7813||+||0.115 * 0.486|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0||+||4.679 * -0.1178||-||0.327 * 1.1216|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $3,325 Mil.|
Revenue was 13399 + 13981 + 15589 + 16890 = $59,859 Mil.
Gross Profit was 13399 + -51215 + 47141 + -14662 = $-5,337 Mil.
Total Current Assets was $22,148 Mil.
Total Assets was $76,559 Mil.
Property, Plant and Equipment(Net PPE) was $36,213 Mil.
Depreciation, Depletion and Amortization(DDA) was $7,801 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $18,532 Mil.
Long-Term Debt was $16,309 Mil.
Net Income was -416 + -6686 + -711 + 179 = $-7,634 Mil.
Non Operating Income was 333 + -997 + -379 + 52 = $-991 Mil.
Cash Flow from Operations was -690 + 1574 + 473 + 1019 = $2,376 Mil.
|Accounts Receivable was $4,253 Mil.
Revenue was 17118 + 18723 + 20067 + 20704 = $76,612 Mil.
Gross Profit was 17118 + 17741 + 20067 + 19773 = $74,699 Mil.
Total Current Assets was $25,061 Mil.
Total Assets was $88,517 Mil.
Property, Plant and Equipment(Net PPE) was $41,694 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,930 Mil.
Selling, General & Admin. Expense(SGA) was $35,849 Mil.
Total Current Liabilities was $18,928 Mil.
Long-Term Debt was $16,986 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)|
|=||(3325 / 59859)||/||(4253 / 76612)|
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)|
|=||(-51215 / 76612)||/||(13399 / 59859)|
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 - (22148 + 36213) / 76559)||/||(1 - (25061 + 41694) / 88517)|
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))|
|=||(3930 / (3930 + 41694))||/||(7801 / (7801 + 36213))|
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 / 59859)||/||(35849 / 76612)|
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)|
|=||((16309 + 18532) / 76559)||/||((16986 + 18928) / 88517)|
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|
|=||(-7634 - -991||-||2376)||/||76559|
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 -9.47 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