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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 Petroleo Brasileiro SA Petrobras was -1.63. The lowest was -3.15. And the median was -2.59.
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 Petroleo Brasileiro SA Petrobras 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 * 1.0165||+||0.528 * 0.9602||+||0.404 * 0.9676||+||0.892 * 0.8365||+||0.115 * 0.9059|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0911||+||4.679 * -0.0708||-||0.327 * 0.8894|
* 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 $7,271 Mil.|
Revenue was 21403 + 21693 + 20320 + 17989 = $81,405 Mil.
Gross Profit was 6926 + 7187 + 6502 + 5373 = $25,988 Mil.
Total Current Assets was $44,769 Mil.
Total Assets was $246,983 Mil.
Property, Plant and Equipment(Net PPE) was $175,470 Mil.
Depreciation, Depletion and Amortization(DDA) was $13,965 Mil.
Selling, General & Admin. Expense(SGA) was $7,282 Mil.
Total Current Liabilities was $24,903 Mil.
Long-Term Debt was $108,597 Mil.
Net Income was 754 + -5380 + 106 + -318 = $-4,838 Mil.
Non Operating Income was -1246 + -8415 + -1937 + -1862 = $-13,460 Mil.
Cash Flow from Operations was 7210 + 8226 + 6251 + 4428 = $26,115 Mil.
|Accounts Receivable was $8,551 Mil.
Revenue was 22147 + 23179 + 26021 + 25967 = $97,314 Mil.
Gross Profit was 6987 + 6695 + 8320 + 7827 = $29,829 Mil.
Total Current Assets was $43,428 Mil.
Total Assets was $230,521 Mil.
Property, Plant and Equipment(Net PPE) was $161,297 Mil.
Depreciation, Depletion and Amortization(DDA) was $11,543 Mil.
Selling, General & Admin. Expense(SGA) was $7,978 Mil.
Total Current Liabilities was $28,573 Mil.
Long-Term Debt was $111,521 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)|
|=||(7271 / 81405)||/||(8551 / 97314)|
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)|
|=||(29829 / 97314)||/||(25988 / 81405)|
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 - (44769 + 175470) / 246983)||/||(1 - (43428 + 161297) / 230521)|
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))|
|=||(11543.125 / (11543.125 + 161297))||/||(13965 / (13965 + 175470))|
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)|
|=||(7282 / 81405)||/||(7978 / 97314)|
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)|
|=||((108597 + 24903) / 246983)||/||((111521 + 28573) / 230521)|
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|
|=||(-4838 - -13460||-||26115)||/||246983|
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.
Petroleo Brasileiro SA Petrobras has a M-score of -2.97 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
Petroleo Brasileiro SA Petrobras Annual Data
Petroleo Brasileiro SA Petrobras Quarterly Data