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GuruFocus has detected 2 Warning Signs with Petroleo Brasileiro SA Petrobras $PBR.
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Petroleo Brasileiro SA Petrobras (NYSE:PBR)
Beneish M-Score
-3.11 (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.

Petroleo Brasileiro SA Petrobras has a M-score of -2.97 suggests that the company is not a manipulator.

PBR' s Beneish M-Score Range Over the Past 10 Years
Min: -3.15   Max: -1.63
Current: -3.11

-3.15
-1.63

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.


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 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
=-2.97

* 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

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)
=(7271 / 81405) / (8551 / 97314)
=0.08931884 / 0.08787019
=1.0165

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)
=(29829 / 97314) / (25988 / 81405)
=0.30652321 / 0.31924329
=0.9602

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 - (44769 + 175470) / 246983) / (1 - (43428 + 161297) / 230521)
=0.10828276 / 0.11190304
=0.9676

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
=81405 / 97314
=0.8365

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))
=0.06678498 / 0.07371922
=0.9059

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)
=0.08945396 / 0.08198204
=1.0911

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)
=0.54052303 / 0.60772771
=0.8894

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
=(-4838 - -13460 - 26115) / 246983
=-0.0708

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.


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.

Petroleo Brasileiro SA Petrobras Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.85430.75041.57961.01931.41610.90740.89460.79231.07160.9543
GMI 1.02791.12680.86181.23871.13261.27681.07790.96940.77620.9627
AQI 1.4040.90060.94732.36270.86020.90750.65760.75031.14760.9677
SGI 1.21271.34790.77691.31111.21140.98760.98171.01550.67740.892
DEPI 0.95110.94381.31451.05640.86481.0580.9410.97350.83820.8569
SGAI 1.02210.84741.20461.03830.82331.0290.94321.15381.01681.3063
LVGI 0.84791.27141.10060.75751.13731.08561.17171.15481.1990.8894
TATA -0.0578-0.0815-0.0501-0.0329-0.0332-0.0371-0.0385-0.0357-0.0571-0.0839
M-score -2.48-2.82-2.51-1.58-2.08-2.67-2.92-3.02-3.11-3.08

Petroleo Brasileiro SA Petrobras Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.72650.80130.63060.76690.87291.06311.30741.25451.3071.0165
GMI 1.03440.97910.90210.81260.77670.77750.82060.89030.9160.9602
AQI 0.48220.75030.82130.80681.04951.14760.97171.05911.01390.9676
SGI 1.0271.00180.95420.86810.73440.68440.66840.68120.7670.8365
DEPI 1.16511.0020.82860.860.74530.82010.99190.92990.93560.9059
SGAI 1.32891.19281.11051.20390.95850.98331.12051.08161.24281.0911
LVGI 1.19251.15481.17521.22141.26951.1991.06320.99130.91480.8894
TATA -0.0371-0.0892-0.1077-0.1085-0.1143-0.0578-0.0583-0.0492-0.0562-0.0708
M-score -3.17-3.27-3.58-3.62-3.58-3.11-2.91-2.81-2.73-2.97
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