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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 -3.29. 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 * 1.307||+||0.528 * 0.916||+||0.404 * 1.0139||+||0.892 * 0.767||+||0.115 * 0.9391|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2428||+||4.679 * -0.0562||-||0.327 * 0.9148|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $7,905 Mil.|
Revenue was 21693 + 20320 + 17989 + 22147 = $82,149 Mil.
Gross Profit was 7187 + 6502 + 5373 + 6987 = $26,049 Mil.
Total Current Assets was $44,591 Mil.
Total Assets was $247,429 Mil.
Property, Plant and Equipment(Net PPE) was $176,633 Mil.
Depreciation, Depletion and Amortization(DDA) was $13,566 Mil.
Selling, General & Admin. Expense(SGA) was $7,864 Mil.
Total Current Liabilities was $25,514 Mil.
Long-Term Debt was $111,227 Mil.
Net Income was -5380 + 106 + -318 + -9421 = $-15,013 Mil.
Non Operating Income was -8415 + -1937 + -1862 + -14374 = $-26,588 Mil.
Cash Flow from Operations was 8226 + 6251 + 4428 + 6577 = $25,482 Mil.
|Accounts Receivable was $7,886 Mil.
Revenue was 23179 + 26021 + 25967 + 31940.146 = $107,107 Mil.
Gross Profit was 6695 + 8320 + 7827 + 8268.607 = $31,111 Mil.
Total Current Assets was $44,397 Mil.
Total Assets was $234,479 Mil.
Property, Plant and Equipment(Net PPE) was $165,590 Mil.
Depreciation, Depletion and Amortization(DDA) was $11,888 Mil.
Selling, General & Admin. Expense(SGA) was $8,250 Mil.
Total Current Liabilities was $27,616 Mil.
Long-Term Debt was $114,035 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)|
|=||(7905 / 82149)||/||(7886 / 107107.146)|
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)|
|=||(31110.607 / 107107.146)||/||(26049 / 82149)|
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 - (44591 + 176633) / 247429)||/||(1 - (44397 + 165590) / 234479)|
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))|
|=||(11888.194 / (11888.194 + 165590))||/||(13566 / (13566 + 176633))|
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)|
|=||(7864 / 82149)||/||(8250.198 / 107107.146)|
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)|
|=||((111227 + 25514) / 247429)||/||((114035 + 27616) / 234479)|
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|
|=||(-15013 - -26588||-||25482)||/||247429|
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 -2.73 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