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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.
Petroleo Brasileiro SA Petrobras has a M-score of -3.46 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Petroleo Brasileiro SA Petrobras was -1.13. The lowest was -3.46. And the median was -2.38.
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 * 0.4861||+||0.528 * 1.0547||+||0.404 * 0.5764||+||0.892 * 0.9768||+||0.115 * 0.423|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2576||+||4.679 * -0.0311||-||0.327 * 1.2787|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $15,754 Mil.|
Revenue was 34494 + 35593 + 33955 + 35569 = $139,611 Mil.
Gross Profit was 8229 + 7474 + 7248 + 9038 = $31,989 Mil.
Total Current Assets was $70,555 Mil.
Total Assets was $354,403 Mil.
Property, Plant and Equipment(Net PPE) was $240,793 Mil.
Depreciation, Depletion and Amortization(DDA) was $13,003 Mil.
Selling, General & Admin. Expense(SGA) was $9,735 Mil.
Total Current Liabilities was $37,006 Mil.
Long-Term Debt was $126,514 Mil.
Net Income was 2280 + 2760 + 1484 + 2996 = $9,520 Mil.
Non Operating Income was 347 + -2136 + -76 + -415 = $-2,280 Mil.
Cash Flow from Operations was 3981 + 4734 + 6274 + 7826 = $22,815 Mil.
|Accounts Receivable was $33,178 Mil.
Revenue was 36345 + 35660 + 36261.916 + 34659 = $142,926 Mil.
Gross Profit was 9448 + 8046 + 8887.469 + 8157 = $34,538 Mil.
Total Current Assets was $116,893 Mil.
Total Assets was $695,313 Mil.
Property, Plant and Equipment(Net PPE) was $431,874 Mil.
Depreciation, Depletion and Amortization(DDA) was $9,568 Mil.
Selling, General & Admin. Expense(SGA) was $7,925 Mil.
Total Current Liabilities was $68,529 Mil.
Long-Term Debt was $182,370 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)|
|=||(15754 / 139611)||/||(33178.487 / 142925.916)|
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)|
|=||(7474 / 142925.916)||/||(8229 / 139611)|
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 - (70555 + 240793) / 354403)||/||(1 - (116893.309 + 431874.155) / 695313.138)|
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))|
|=||(9567.871 / (9567.871 + 431874.155))||/||(13003 / (13003 + 240793))|
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)|
|=||(9735 / 139611)||/||(7924.875 / 142925.916)|
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)|
|=||((126514 + 37006) / 354403)||/||((182369.588 + 68529.092) / 695313.138)|
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|
|=||(9520 - -2280||-||22815)||/||354403|
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 -3.46 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