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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 -83.81. And the median was -2.36.
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 * 0.8946||+||0.528 * 0.1347||+||0.404 * 0.9851||+||0.892 * 0.9102||+||0.115 * 0.961|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * -3.767||+||4.679 * -0.0323||-||0.327 * 1.074|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $4,283 Mil.|
Revenue was 16890 + 17118 + 18723 + 20067 = $72,798 Mil.
Gross Profit was -14662 + 17118 + 18723 + 20067 = $41,246 Mil.
Total Current Assets was $26,887 Mil.
Total Assets was $91,932 Mil.
Property, Plant and Equipment(Net PPE) was $42,545 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,819 Mil.
Selling, General & Admin. Expense(SGA) was $50,561 Mil.
Total Current Liabilities was $19,553 Mil.
Long-Term Debt was $18,031 Mil.
Net Income was 179 + -728 + -955 + 22 = $-1,482 Mil.
Non Operating Income was 881 + -758 + -929 + -603 = $-1,409 Mil.
Cash Flow from Operations was 1019 + -915 + 2292 + 501 = $2,897 Mil.
|Accounts Receivable was $5,260 Mil.
Revenue was 20704 + 19788 + 19848 + 19643 = $79,983 Mil.
Gross Profit was 19773 + 19788 + -51967 + 18508 = $6,102 Mil.
Total Current Assets was $31,538 Mil.
Total Assets was $109,603 Mil.
Property, Plant and Equipment(Net PPE) was $50,835 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,370 Mil.
Selling, General & Admin. Expense(SGA) was $-14,747 Mil.
Total Current Liabilities was $23,589 Mil.
Long-Term Debt was $18,132 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)|
|=||(4283 / 72798)||/||(5260 / 79983)|
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)|
|=||(17118 / 79983)||/||(-14662 / 72798)|
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 - (26887 + 42545) / 91932)||/||(1 - (31538 + 50835) / 109603)|
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))|
|=||(4370 / (4370 + 50835))||/||(3819 / (3819 + 42545))|
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)|
|=||(50561 / 72798)||/||(-14747 / 79983)|
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)|
|=||((18031 + 19553) / 91932)||/||((18132 + 23589) / 109603)|
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|
|=||(-1482 - -1409||-||2897)||/||91932|
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 -2.48 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