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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 -3.28. And the median was -2.34.
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 * 0.5634||+||0.528 * 0.8395||+||0.404 * 1.1942||+||0.892 * 0.8709||+||0.115 * 1.0778|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0542||+||4.679 * -0.0346||-||0.327 * 0.9469|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $1,817 Mil.|
Revenue was 5942 + 9459 + 11127 + 11195 = $37,723 Mil.
Gross Profit was 554 + 697 + 579 + 555 = $2,385 Mil.
Total Current Assets was $3,453 Mil.
Total Assets was $21,724 Mil.
Property, Plant and Equipment(Net PPE) was $12,484 Mil.
Depreciation, Depletion and Amortization(DDA) was $403 Mil.
Selling, General & Admin. Expense(SGA) was $314 Mil.
Total Current Liabilities was $3,531 Mil.
Long-Term Debt was $8,763 Mil.
Net Income was 283 + 390 + 323 + 287 = $1,283 Mil.
Non Operating Income was 33 + 35 + 25 + 27 = $120 Mil.
Cash Flow from Operations was 732 + 726 + 315 + 141 = $1,914 Mil.
|Accounts Receivable was $3,703 Mil.
Revenue was 11684 + 10632 + 10703 + 10295 = $43,314 Mil.
Gross Profit was 678 + 588 + 468 + 565 = $2,299 Mil.
Total Current Assets was $4,932 Mil.
Total Assets was $20,702 Mil.
Property, Plant and Equipment(Net PPE) was $11,152 Mil.
Depreciation, Depletion and Amortization(DDA) was $389 Mil.
Selling, General & Admin. Expense(SGA) was $342 Mil.
Total Current Liabilities was $5,554 Mil.
Long-Term Debt was $6,818 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)|
|=||(1817 / 37723)||/||(3703 / 43314)|
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)|
|=||(697 / 43314)||/||(554 / 37723)|
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 - (3453 + 12484) / 21724)||/||(1 - (4932 + 11152) / 20702)|
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))|
|=||(389 / (389 + 11152))||/||(403 / (403 + 12484))|
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)|
|=||(314 / 37723)||/||(342 / 43314)|
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)|
|=||((8763 + 3531) / 21724)||/||((6818 + 5554) / 20702)|
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|
|=||(1283 - 120||-||1914)||/||21724|
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 -3.15 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