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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 -2.80 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Petroleo Brasileiro SA Petrobras was -1.51. The lowest was -3.29. And the median was -2.45.
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 * 0.9552||+||0.528 * 1.111||+||0.404 * 0.592||+||0.892 * 0.9392||+||0.115 * 1.1616|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.7421||+||4.679 * -0.0302||-||0.327 * 1.125|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $14,419 Mil.|
Revenue was 36910 + 34494 + 35593 + 33955 = $140,952 Mil.
Gross Profit was 8528 + 8229 + 7474 + 7248 = $31,479 Mil.
Total Current Assets was $65,502 Mil.
Total Assets was $363,392 Mil.
Property, Plant and Equipment(Net PPE) was $253,955 Mil.
Depreciation, Depletion and Amortization(DDA) was $13,087 Mil.
Selling, General & Admin. Expense(SGA) was $9,277 Mil.
Total Current Liabilities was $34,167 Mil.
Long-Term Debt was $129,025 Mil.
Net Income was 2225 + 2280 + 2760 + 1484 = $8,749 Mil.
Non Operating Income was 587 + 347 + -2136 + -481 = $-1,683 Mil.
Cash Flow from Operations was 6413 + 3981 + 4734 + 6274 = $21,402 Mil.
|Accounts Receivable was $16,073 Mil.
Revenue was 35984.424 + 35929.576 + 41904.474 + 36261.916 = $150,080 Mil.
Gross Profit was 9145.86 + 9340.14 + 9863.84 + 8887.469 = $37,237 Mil.
Total Current Assets was $65,313 Mil.
Total Assets was $338,068 Mil.
Property, Plant and Equipment(Net PPE) was $203,716 Mil.
Depreciation, Depletion and Amortization(DDA) was $12,297 Mil.
Selling, General & Admin. Expense(SGA) was $13,310 Mil.
Total Current Liabilities was $30,765 Mil.
Long-Term Debt was $104,189 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)|
|=||(14419 / 140952)||/||(16073 / 150080.39)|
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)|
|=||(8229 / 150080.39)||/||(8528 / 140952)|
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 - (65502 + 253955) / 363392)||/||(1 - (65313 + 203716) / 338068)|
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))|
|=||(12297 / (12297 + 203716))||/||(13087 / (13087 + 253955))|
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)|
|=||(9277 / 140952)||/||(13309.818 / 150080.39)|
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)|
|=||((129025 + 34167) / 363392)||/||((104189 + 30765) / 338068)|
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|
|=||(8749 - -1683||-||21402)||/||363392|
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 -2.80 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