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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 -5.62. And the median was -2.45.
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 * 0.8784||+||0.528 * 0.1402||+||0.404 * 1.0057||+||0.892 * 0.8497||+||0.115 * 0.9379|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 10.4167||+||4.679 * -0.0456||-||0.327 * 1.0764|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $3,687 Mil.|
Revenue was 15589 + 16890 + 17118 + 18723 = $68,320 Mil.
Gross Profit was 14812 + -14662 + 17118 + 17741 = $35,009 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 $31,146 Mil.
Total Current Liabilities was $17,701 Mil.
Long-Term Debt was $17,932 Mil.
Net Income was -711 + 179 + -728 + -955 = $-2,215 Mil.
Non Operating Income was -379 + 881 + -758 + -929 = $-1,185 Mil.
Cash Flow from Operations was 473 + 1019 + -915 + 2292 = $2,869 Mil.
|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.
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)|
|=||(3687 / 68320)||/||(4940 / 80407)|
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)|
|=||(-14662 / 80407)||/||(14812 / 68320)|
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 - (23765 + 40480) / 85590)||/||(1 - (30103 + 48162) / 104073)|
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))|
|=||(4080 / (4080 + 48162))||/||(3677 / (3677 + 40480))|
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)|
|=||(31146 / 68320)||/||(3519 / 80407)|
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)|
|=||((17932 + 17701) / 85590)||/||((17487 + 22764) / 104073)|
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|
|=||(-2215 - -1185||-||2869)||/||85590|
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 -5.04 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