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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 -3.05. And the median was -2.47.
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 * 1.2815||+||0.528 * 0.6777||+||0.404 * 1.0129||+||0.892 * 0.5327||+||0.115 * 0.9767|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.6059||+||4.679 * -0.0277||-||0.327 * 1.0199|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $1,785 Mil.|
Revenue was 4996 + 5551 + 6663 + 5942 = $23,152 Mil.
Gross Profit was 518 + 502 + 398 + 554 = $1,972 Mil.
Total Current Assets was $2,969 Mil.
Total Assets was $22,288 Mil.
Property, Plant and Equipment(Net PPE) was $13,474 Mil.
Depreciation, Depletion and Amortization(DDA) was $432 Mil.
Selling, General & Admin. Expense(SGA) was $278 Mil.
Total Current Liabilities was $3,407 Mil.
Long-Term Debt was $10,375 Mil.
Net Income was 246 + 249 + 124 + 283 = $902 Mil.
Non Operating Income was 49 + 41 + 53 + 33 = $176 Mil.
Cash Flow from Operations was 122 + 562 + -72 + 732 = $1,344 Mil.
|Accounts Receivable was $2,615 Mil.
Revenue was 9459 + 11127 + 11195 + 11684 = $43,465 Mil.
Gross Profit was 697 + 579 + 555 + 678 = $2,509 Mil.
Total Current Assets was $4,179 Mil.
Total Assets was $22,198 Mil.
Property, Plant and Equipment(Net PPE) was $12,272 Mil.
Depreciation, Depletion and Amortization(DDA) was $384 Mil.
Selling, General & Admin. Expense(SGA) was $325 Mil.
Total Current Liabilities was $4,755 Mil.
Long-Term Debt was $8,704 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)|
|=||(1785 / 23152)||/||(2615 / 43465)|
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)|
|=||(502 / 43465)||/||(518 / 23152)|
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 - (2969 + 13474) / 22288)||/||(1 - (4179 + 12272) / 22198)|
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))|
|=||(384 / (384 + 12272))||/||(432 / (432 + 13474))|
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)|
|=||(278 / 23152)||/||(325 / 43465)|
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)|
|=||((10375 + 3407) / 22288)||/||((8704 + 4755) / 22198)|
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|
|=||(902 - 176||-||1344)||/||22288|
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 -3.05 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