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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 8 years, the highest Beneish M-Score of NGL Energy Partners LP was 1.85. The lowest was -3.97. And the median was -1.59.
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 NGL Energy Partners LP 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 * 1.446||+||0.528 * 1.2266||+||0.404 * 0.9394||+||0.892 * 0.91||+||0.115 * 0.9581|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8466||+||4.679 * -0.0457||-||0.327 * 1.0449|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $765 Mil.|
Revenue was 3406.641 + 3045.538 + 2721.97 + 2325.44 = $11,500 Mil.
Gross Profit was 178.619 + 116.808 + 155.53 + 248.28 = $699 Mil.
Total Current Assets was $1,563 Mil.
Total Assets was $6,378 Mil.
Property, Plant and Equipment(Net PPE) was $1,747 Mil.
Depreciation, Depletion and Amortization(DDA) was $232 Mil.
Selling, General & Admin. Expense(SGA) was $431 Mil.
Total Current Liabilities was $967 Mil.
Long-Term Debt was $3,217 Mil.
Net Income was 0.976 + -66.599 + 176.92 + -391.229 = $-280 Mil.
Non Operating Income was 19.365 + 1.075 + 19.753 + 30.697 = $71 Mil.
Cash Flow from Operations was -61.266 + 15.023 + -71.422 + 58.361 = $-59 Mil.
|Accounts Receivable was $582 Mil.
Revenue was 2685.006 + 3193.195 + 3538.469 + 3220.771 = $12,637 Mil.
Gross Profit was 251.506 + 187.369 + 215.918 + 287.75 = $943 Mil.
Total Current Assets was $1,230 Mil.
Total Assets was $6,564 Mil.
Property, Plant and Equipment(Net PPE) was $1,973 Mil.
Depreciation, Depletion and Amortization(DDA) was $249 Mil.
Selling, General & Admin. Expense(SGA) was $560 Mil.
Total Current Liabilities was $797 Mil.
Long-Term Debt was $3,323 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)|
|=||(765.29 / 11499.589)||/||(581.621 / 12637.441)|
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)|
|=||(942.543 / 12637.441)||/||(699.237 / 11499.589)|
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 - (1562.703 + 1746.925) / 6378.076)||/||(1 - (1229.559 + 1972.925) / 6564.471)|
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))|
|=||(249.328 / (249.328 + 1972.925))||/||(231.696 / (231.696 + 1746.925))|
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)|
|=||(431.389 / 11499.589)||/||(559.958 / 12637.441)|
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)|
|=||((3216.505 + 966.846) / 6378.076)||/||((3323.492 + 796.908) / 6564.471)|
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|
|=||(-279.932 - 70.89||-||-59.304)||/||6378.076|
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.
NGL Energy Partners LP has a M-score of -2.26 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
NGL Energy Partners LP Annual Data
NGL Energy Partners LP Quarterly Data