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GuruFocus has detected 6 Warning Signs with Plains All American Pipeline LP $PAA.
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Plains All American Pipeline LP (NYSE:PAA)
Beneish M-Score
-2.27 (As of Today)

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.

Plains All American Pipeline LP has a M-score of -2.27 suggests that the company is not a manipulator.

PAA' s Beneish M-Score Range Over the Past 10 Years
Min: -3.05   Max: -0.5
Current: -2.27

-3.05
-0.5

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 -2.37.


Definition

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 * 1.4646+0.528 * 0.9729+0.404 * 0.9554+0.892 * 0.8717+0.115 * 0.9034
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1513+4.679 * -0.0071-0.327 * 0.9878
=-2.27

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $2,279 Mil.
Revenue was 5951 + 5170 + 4950 + 4111 = $20,182 Mil.
Gross Profit was 429 + 452 + 423 + 463 = $1,767 Mil.
Total Current Assets was $4,272 Mil.
Total Assets was $24,210 Mil.
Property, Plant and Equipment(Net PPE) was $13,872 Mil.
Depreciation, Depletion and Amortization(DDA) was $494 Mil.
Selling, General & Admin. Expense(SGA) was $279 Mil.
Total Current Liabilities was $4,664 Mil.
Long-Term Debt was $10,124 Mil.
Net Income was 215 + 264 + 101 + 202 = $782 Mil.
Non Operating Income was 49 + 63 + 65 + 52 = $229 Mil.
Cash Flow from Operations was 84 + 255 + -248 + 635 = $726 Mil.
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.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(2279 / 20182) / (1785 / 23152)
=0.11292241 / 0.07709917
=1.4646

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(1972 / 23152) / (1767 / 20182)
=0.08517623 / 0.08755327
=0.9729

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (4272 + 13872) / 24210) / (1 - (2969 + 13474) / 22288)
=0.25055762 / 0.26224874
=0.9554

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=20182 / 23152
=0.8717

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))
=(432 / (432 + 13474)) / (494 / (494 + 13872))
=0.03106573 / 0.03438675
=0.9034

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)
=(279 / 20182) / (278 / 23152)
=0.0138242 / 0.0120076
=1.1513

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)
=((10124 + 4664) / 24210) / ((10375 + 3407) / 22288)
=0.61082197 / 0.61835966
=0.9878

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(782 - 229 - 726) / 24210
=-0.0071

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 -2.27 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Plains All American Pipeline LP Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.63360.4042.3980.87180.87761.01290.91350.69871.28151.4646
GMI 0.62091.31670.48491.3360.92250.90271.02111.00990.67750.9729
AQI 0.93041.29390.8061.00541.11411.08040.97281.15171.01290.9554
SGI 0.90861.4740.61611.39811.32371.10281.11781.02880.53270.8717
DEPI 0.65730.98281.11560.97391.18230.65471.45871.07560.97670.9034
SGAI 1.3470.66192.14050.88140.85421.05490.93910.881.60581.1513
LVGI 0.9890.96661.03431.00680.90951.01850.99591.0181.01990.9878
TATA -0.045-0.04660.01480.0184-0.0906-0.0099-0.0323-0.0327-0.0277-0.0094
M-score -2.51-2.47-2.01-1.96-2.65-2.50-2.54-2.79-3.05-2.28

Plains All American Pipeline LP Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.90940.69870.56340.960.84631.28151.50831.26891.51571.4646
GMI 1.12441.01030.83950.77120.69030.67770.71660.69060.80690.9729
AQI 0.96861.15171.19421.1781.23261.01290.98440.99630.94740.9554
SGI 1.08721.02880.87090.75070.61860.53270.56520.59080.69630.8717
DEPI 1.11791.07561.07961.08531.06730.97670.9720.78130.91670.9034
SGAI 0.88340.881.05421.18371.3551.60591.50451.45811.36571.1513
LVGI 1.0171.0180.94690.99591.00281.01990.96810.9810.96360.9878
TATA -0.0195-0.0327-0.0346-0.0318-0.0479-0.0277-0.0279-0.0207-0.0077-0.0071
M-score -2.50-2.79-3.15-2.96-3.31-3.05-2.77-2.96-2.50-2.27
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