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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 -2.53.
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 * 0.9177||+||0.528 * 4.2009||+||0.404 * 0.9952||+||0.892 * 0.7928||+||0.115 * 0.4667|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.5051||+||4.679 * -0.1072||-||0.327 * 0.9708|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $3,116 Mil.|
Revenue was 14743 + 13399 + 13981 + 15589 = $57,712 Mil.
Gross Profit was 14063 + 0 + -48784 + 44710 = $9,989 Mil.
Total Current Assets was $20,768 Mil.
Total Assets was $75,019 Mil.
Property, Plant and Equipment(Net PPE) was $35,978 Mil.
Depreciation, Depletion and Amortization(DDA) was $7,710 Mil.
Selling, General & Admin. Expense(SGA) was $12,973 Mil.
Total Current Liabilities was $15,754 Mil.
Long-Term Debt was $14,019 Mil.
Net Income was 1112 + -416 + -6686 + -711 = $-6,701 Mil.
Non Operating Income was 160 + 333 + -997 + -379 = $-883 Mil.
Cash Flow from Operations was 869 + -690 + 1574 + 473 = $2,226 Mil.
|Accounts Receivable was $4,283 Mil.
Revenue was 16890 + 17118 + 18723 + 20067 = $72,798 Mil.
Gross Profit was 16070 + 0 + 17741 + 19121 = $52,932 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 $32,399 Mil.
Total Current Liabilities was $19,553 Mil.
Long-Term Debt was $18,031 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)|
|=||(3116 / 57712)||/||(4283 / 72798)|
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)|
|=||(52932 / 72798)||/||(9989 / 57712)|
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 - (20768 + 35978) / 75019)||/||(1 - (26887 + 42545) / 91932)|
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))|
|=||(3819 / (3819 + 42545))||/||(7710 / (7710 + 35978))|
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)|
|=||(12973 / 57712)||/||(32399 / 72798)|
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)|
|=||((14019 + 15754) / 75019)||/||((18031 + 19553) / 91932)|
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|
|=||(-6701 - -883||-||2226)||/||75019|
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 -1.52 signals that the company is likely to 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