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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 5 years, the highest Beneish M-Score of NGL Energy Partners LP was 1.72. The lowest was -1.59. And the median was -1.09.
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 * 0.6326||+||0.528 * 1.5308||+||0.404 * 0.9572||+||0.892 * 2.3917||+||0.115 * 1.111|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.683||+||4.679 * -0.0205||-||0.327 * 1.0405|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|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 $494 Mil.
Total Current Liabilities was $1,901 Mil.
Long-Term Debt was $2,753 Mil.
Net Income was -10.918 + -19.224 + -39.975 + 42.331 = $-28 Mil.
Non Operating Income was 4.613 + 3.08 + 2.174 + 1.361 = $11 Mil.
Cash Flow from Operations was 143.475 + -70.841 + 9.206 + 20.463 = $102 Mil.
|Accounts Receivable was $1,100 Mil.
Revenue was 2743.445 + 1593.937 + 1385.957 + 1617.613 = $7,341 Mil.
Gross Profit was 167.416 + 105.087 + 82.881 + 135.723 = $491 Mil.
Total Current Assets was $1,655 Mil.
Total Assets was $4,477 Mil.
Property, Plant and Equipment(Net PPE) was $806 Mil.
Depreciation, Depletion and Amortization(DDA) was $120 Mil.
Selling, General & Admin. Expense(SGA) was $303 Mil.
Total Current Liabilities was $1,382 Mil.
Long-Term Debt was $1,518 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)|
|=||(1664.039 / 17557.221)||/||(1099.833 / 7340.952)|
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)|
|=||(201.061 / 7340.952)||/||(240.478 / 17557.221)|
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 - (2457.747 + 1472.295) / 6905.902)||/||(1 - (1654.999 + 806.437) / 4476.978)|
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))|
|=||(120.453 / (120.453 + 806.437))||/||(195.03 / (195.03 + 1472.295))|
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)|
|=||(494.35 / 17557.221)||/||(302.625 / 7340.952)|
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)|
|=||((2753.322 + 1901.168) / 6905.902)||/||((1517.519 + 1382.401) / 4476.978)|
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|
|=||(-27.786 - 11.228||-||102.303)||/||6905.902|
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 -1.36 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
NGL Energy Partners LP Annual Data
NGL Energy Partners LP Quarterly Data