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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 Plains All American Pipeline LP was -0.50. The lowest was -3.31. And the median was -2.46.
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 Plains All American Pipeline 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 * 1.2689||+||0.528 * 0.6906||+||0.404 * 0.9963||+||0.892 * 0.5908||+||0.115 * 0.8132|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.4581||+||4.679 * -0.0207||-||0.327 * 0.981|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $2,015 Mil.|
Revenue was 4950 + 4111 + 4996 + 5551 = $19,608 Mil.
Gross Profit was 423 + 463 + 518 + 502 = $1,906 Mil.
Total Current Assets was $3,603 Mil.
Total Assets was $23,163 Mil.
Property, Plant and Equipment(Net PPE) was $13,598 Mil.
Depreciation, Depletion and Amortization(DDA) was $534 Mil.
Selling, General & Admin. Expense(SGA) was $261 Mil.
Total Current Liabilities was $4,029 Mil.
Long-Term Debt was $9,486 Mil.
Net Income was 101 + 202 + 246 + 249 = $798 Mil.
Non Operating Income was 65 + 52 + 49 + 41 = $207 Mil.
Cash Flow from Operations was -248 + 635 + 122 + 562 = $1,071 Mil.
|Accounts Receivable was $2,688 Mil.
Revenue was 6663 + 5942 + 9459 + 11127 = $33,191 Mil.
Gross Profit was 398 + 554 + 697 + 579 = $2,228 Mil.
Total Current Assets was $3,944 Mil.
Total Assets was $22,884 Mil.
Property, Plant and Equipment(Net PPE) was $13,028 Mil.
Depreciation, Depletion and Amortization(DDA) was $413 Mil.
Selling, General & Admin. Expense(SGA) was $303 Mil.
Total Current Liabilities was $4,474 Mil.
Long-Term Debt was $9,137 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)|
|=||(2015 / 19608)||/||(2688 / 33191)|
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)|
|=||(2228 / 33191)||/||(1906 / 19608)|
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 - (3603 + 13598) / 23163)||/||(1 - (3944 + 13028) / 22884)|
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))|
|=||(413 / (413 + 13028))||/||(534 / (534 + 13598))|
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)|
|=||(261 / 19608)||/||(303 / 33191)|
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)|
|=||((9486 + 4029) / 23163)||/||((9137 + 4474) / 22884)|
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|
|=||(798 - 207||-||1071)||/||23163|
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.
Plains All American Pipeline LP has a M-score of -2.95 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
Plains All American Pipeline LP Annual Data
Plains All American Pipeline LP Quarterly Data