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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 -3.95. And the median was -1.54.
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 * 1.1191||+||0.528 * 0.8965||+||0.404 * 0.9791||+||0.892 * 0.7431||+||0.115 * 0.9736|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0768||+||4.679 * -0.0627||-||0.327 * 1.0393|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $592 Mil.|
Revenue was 3045.538 + 2721.97 + 2325.44 + 2685.006 = $10,778 Mil.
Gross Profit was 116.808 + 155.53 + 248.28 + 251.506 = $772 Mil.
Total Current Assets was $1,250 Mil.
Total Assets was $6,074 Mil.
Property, Plant and Equipment(Net PPE) was $1,755 Mil.
Depreciation, Depletion and Amortization(DDA) was $233 Mil.
Selling, General & Admin. Expense(SGA) was $459 Mil.
Total Current Liabilities was $799 Mil.
Long-Term Debt was $3,063 Mil.
Net Income was -66.599 + 176.92 + -340.063 + 23.481 = $-206 Mil.
Non Operating Income was 1.075 + 19.753 + 30.697 + 2.297 = $54 Mil.
Cash Flow from Operations was 15.023 + -71.422 + 58.361 + 119.039 = $121 Mil.
|Accounts Receivable was $712 Mil.
Revenue was 3193.195 + 3538.469 + 3220.771 + 4552.146 = $14,505 Mil.
Gross Profit was 187.369 + 215.918 + 287.75 + 240.478 = $932 Mil.
Total Current Assets was $1,277 Mil.
Total Assets was $6,450 Mil.
Property, Plant and Equipment(Net PPE) was $1,845 Mil.
Depreciation, Depletion and Amortization(DDA) was $237 Mil.
Selling, General & Admin. Expense(SGA) was $574 Mil.
Total Current Liabilities was $852 Mil.
Long-Term Debt was $3,094 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)|
|=||(592.074 / 10777.954)||/||(712.025 / 14504.581)|
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)|
|=||(931.515 / 14504.581)||/||(772.124 / 10777.954)|
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 - (1250.299 + 1755.416) / 6073.918)||/||(1 - (1276.919 + 1845.112) / 6449.837)|
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))|
|=||(237.402 / (237.402 + 1845.112))||/||(232.793 / (232.793 + 1755.416))|
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)|
|=||(459.417 / 10777.954)||/||(574.193 / 14504.581)|
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)|
|=||((3063.008 + 798.853) / 6073.918)||/||((3093.694 + 852.17) / 6449.837)|
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|
|=||(-206.261 - 53.822||-||121.001)||/||6073.918|
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 -2.99 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