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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 -1.56. The lowest was -3.27. And the median was -2.49.
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 * 0.6306||+||0.528 * 0.9045||+||0.404 * 0.8213||+||0.892 * 0.9542||+||0.115 * 0.8149|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1047||+||4.679 * -0.1123||-||0.327 * 1.1752|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $9,479 Mil.|
Revenue was 25967 + 31940.146 + 38844 + 36910 = $133,661 Mil.
Gross Profit was 7827 + 8268.607 + 8774 + 8651 = $33,521 Mil.
Total Current Assets was $42,881 Mil.
Total Assets was $259,335 Mil.
Property, Plant and Equipment(Net PPE) was $190,579 Mil.
Depreciation, Depletion and Amortization(DDA) was $12,832 Mil.
Selling, General & Admin. Expense(SGA) was $10,998 Mil.
Total Current Liabilities was $28,167 Mil.
Long-Term Debt was $112,456 Mil.
Net Income was 1862 + -9990.685 + -2150 + 2225 = $-8,054 Mil.
Non Operating Income was -1183 + -526.577 + -7171 + 1824 = $-7,057 Mil.
Cash Flow from Operations was 5739 + 5624.08 + 10353 + 6413 = $28,129 Mil.
|Accounts Receivable was $15,754 Mil.
Revenue was 34494 + 35593 + 34426.535 + 35569 = $140,083 Mil.
Gross Profit was 8106 + 7284 + 7348.315 + 9038 = $31,776 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 $13,049 Mil.
Selling, General & Admin. Expense(SGA) was $10,434 Mil.
Total Current Liabilities was $37,006 Mil.
Long-Term Debt was $126,514 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)|
|=||(9479 / 133661.146)||/||(15754 / 140082.535)|
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)|
|=||(8268.607 / 140082.535)||/||(7827 / 133661.146)|
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 - (42881 + 190579) / 259335)||/||(1 - (70555 + 240793) / 354403)|
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))|
|=||(13049.002 / (13049.002 + 240793))||/||(12832.194 / (12832.194 + 190579))|
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)|
|=||(10998.198 / 133661.146)||/||(10433.991 / 140082.535)|
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)|
|=||((112456 + 28167) / 259335)||/||((126514 + 37006) / 354403)|
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|
|=||(-8053.685 - -7056.577||-||28129.08)||/||259335|
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 -3.61 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