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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 -1.61. The lowest was -3.16. And the median was -2.51.
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 * 1.1173||+||0.528 * 0.775||+||0.404 * 1.1476||+||0.892 * 0.6512||+||0.115 * 0.8313|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0288||+||4.679 * -0.0776||-||0.327 * 1.199|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $8,551 Mil.|
Revenue was 22147 + 23179 + 25600.93 + 22979.522 = $93,906 Mil.
Gross Profit was 6987 + 6695 + 8185.97 + 6926.03 = $28,794 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 $11,496 Mil.
Selling, General & Admin. Expense(SGA) was $7,765 Mil.
Total Current Liabilities was $28,573 Mil.
Long-Term Debt was $111,521 Mil.
Net Income was -9421 + -1062 + 170.047 + 1647.289 = $-8,666 Mil.
Non Operating Income was -14374 + -1426 + -307.43 + -873.712 = $-16,981 Mil.
Cash Flow from Operations was 6577 + 6745.132 + 7330.289 + 5558.749 = $26,211 Mil.
|Accounts Receivable was $11,752 Mil.
Revenue was 31940.146 + 38844 + 37429.959 + 35985.049 = $144,199 Mil.
Gross Profit was 8268.607 + 8985 + 8558.616 + 8456.453 = $34,269 Mil.
Total Current Assets was $50,713 Mil.
Total Assets was $297,983 Mil.
Property, Plant and Equipment(Net PPE) was $218,214 Mil.
Depreciation, Depletion and Amortization(DDA) was $12,775 Mil.
Selling, General & Admin. Expense(SGA) was $11,590 Mil.
Total Current Liabilities was $31,046 Mil.
Long-Term Debt was $119,990 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)|
|=||(8551 / 93906.452)||/||(11752.201 / 144199.154)|
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)|
|=||(6695 / 144199.154)||/||(6987 / 93906.452)|
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 - (43428 + 161297) / 230521)||/||(1 - (50713.245 + 218213.846) / 297983.459)|
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))|
|=||(12774.896 / (12774.896 + 218213.846))||/||(11495.791 / (11495.791 + 161297))|
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)|
|=||(7764.966 / 93906.452)||/||(11589.563 / 144199.154)|
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)|
|=||((111521 + 28573) / 230521)||/||((119989.634 + 31045.867) / 297983.459)|
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|
|=||(-8665.664 - -16981.142||-||26211.17)||/||230521|
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 -3.19 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