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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 -0.31. The lowest was -4.59. And the median was -2.30.
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 * 0.9039||+||0.528 * -1.8705||+||0.404 * 0.9902||+||0.892 * 0.8019||+||0.115 * 1.0082|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0||+||4.679 * -0.1151||-||0.327 * 1.1939|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $2,679 Mil.|
Revenue was 13981 + 15589 + 16890 + 17118 = $63,578 Mil.
Gross Profit was -51215 + 15589 + -14662 + 17118 = $-33,170 Mil.
Total Current Assets was $22,326 Mil.
Total Assets was $76,846 Mil.
Property, Plant and Equipment(Net PPE) was $35,700 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,192 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $18,041 Mil.
Long-Term Debt was $17,478 Mil.
Net Income was -6686 + -711 + 179 + -728 = $-7,946 Mil.
Non Operating Income was -997 + -379 + 881 + -758 = $-1,253 Mil.
Cash Flow from Operations was 1574 + 473 + 1019 + -915 = $2,151 Mil.
|Accounts Receivable was $3,696 Mil.
Revenue was 18723 + 20067 + 20704 + 19788 = $79,282 Mil.
Gross Profit was 17741 + 20067 + 19773 + 19788 = $77,369 Mil.
Total Current Assets was $28,057 Mil.
Total Assets was $99,179 Mil.
Property, Plant and Equipment(Net PPE) was $46,593 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,203 Mil.
Selling, General & Admin. Expense(SGA) was $35,849 Mil.
Total Current Liabilities was $21,123 Mil.
Long-Term Debt was $17,275 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)|
|=||(2679 / 63578)||/||(3696 / 79282)|
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)|
|=||(15589 / 79282)||/||(-51215 / 63578)|
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 - (22326 + 35700) / 76846)||/||(1 - (28057 + 46593) / 99179)|
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))|
|=||(4203 / (4203 + 46593))||/||(3192 / (3192 + 35700))|
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 / 63578)||/||(35849 / 79282)|
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)|
|=||((17478 + 18041) / 76846)||/||((17275 + 21123) / 99179)|
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|
|=||(-7946 - -1253||-||2151)||/||76846|
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 -4.69 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