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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 7 years, the highest Beneish M-Score of NGL Energy Partners LP was 1.85. The lowest was -3.78. And the median was -1.42.
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 * 0.4856||+||0.528 * 0.586||+||0.404 * 1.1885||+||0.892 * 0.7198||+||0.115 * 1.0426|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.6418||+||4.679 * -0.0741||-||0.327 * 0.9313|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|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 $575 Mil.
Total Current Liabilities was $797 Mil.
Long-Term Debt was $3,323 Mil.
Net Income was 23.481 + -27.043 + -42.401 + 86.778 = $41 Mil.
Non Operating Income was 2.297 + 1.564 + 7.543 + 42.178 = $54 Mil.
Cash Flow from Operations was 119.039 + 92.266 + 81.829 + 180.554 = $474 Mil.
|Accounts Receivable was $1,664 Mil.
Revenue was 4552.146 + 5380.526 + 3648.614 + 3975.935 = $17,557 Mil.
Gross Profit was 240.478 + 201.061 + 114.561 + 211.191 = $767 Mil.
Total Current Assets was $2,458 Mil.
Total Assets was $6,906 Mil.
Property, Plant and Equipment(Net PPE) was $1,472 Mil.
Depreciation, Depletion and Amortization(DDA) was $195 Mil.
Selling, General & Admin. Expense(SGA) was $486 Mil.
Total Current Liabilities was $1,901 Mil.
Long-Term Debt was $2,753 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)|
|=||(581.621 / 12637.441)||/||(1664.039 / 17557.221)|
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)|
|=||(187.369 / 17557.221)||/||(251.506 / 12637.441)|
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 - (1229.559 + 1972.925) / 6564.471)||/||(1 - (2457.747 + 1472.295) / 6905.902)|
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))|
|=||(195.03 / (195.03 + 1472.295))||/||(249.328 / (249.328 + 1972.925))|
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)|
|=||(574.532 / 12637.441)||/||(486.187 / 17557.221)|
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)|
|=||((3323.492 + 796.908) / 6564.471)||/||((2753.322 + 1901.168) / 6905.902)|
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|
|=||(40.815 - 53.582||-||473.688)||/||6564.471|
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 -3.78 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