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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 -3.30. And the median was -2.50.
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 * 1.3299||+||0.528 * 0.8183||+||0.404 * 0.9717||+||0.892 * 0.6627||+||0.115 * 0.977|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1217||+||4.679 * -0.0735||-||0.327 * 1.0629|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $8,283 Mil.|
Revenue was 17989 + 22147 + 23179 + 25600.93 = $88,916 Mil.
Gross Profit was 5373 + 6987 + 6695 + 8185.97 = $27,241 Mil.
Total Current Assets was $41,094 Mil.
Total Assets was $241,413 Mil.
Property, Plant and Equipment(Net PPE) was $176,914 Mil.
Depreciation, Depletion and Amortization(DDA) was $12,099 Mil.
Selling, General & Admin. Expense(SGA) was $8,032 Mil.
Total Current Liabilities was $30,193 Mil.
Long-Term Debt was $108,991 Mil.
Net Income was -318 + -9421 + -1062 + 170.047 = $-10,631 Mil.
Non Operating Income was -1862 + -14374 + -1426 + -307.43 = $-17,969 Mil.
Cash Flow from Operations was 4428 + 6577 + 6745.132 + 7330.289 = $25,080 Mil.
|Accounts Receivable was $9,399 Mil.
Revenue was 25967 + 31940.146 + 38844 + 37429.959 = $134,181 Mil.
Gross Profit was 7827 + 8268.607 + 8985 + 8558.616 = $33,639 Mil.
Total Current Assets was $42,516 Mil.
Total Assets was $257,122 Mil.
Property, Plant and Equipment(Net PPE) was $188,952 Mil.
Depreciation, Depletion and Amortization(DDA) was $12,606 Mil.
Selling, General & Admin. Expense(SGA) was $10,805 Mil.
Total Current Liabilities was $27,926 Mil.
Long-Term Debt was $111,545 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)|
|=||(8283 / 88915.93)||/||(9398.817 / 134181.105)|
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)|
|=||(33639.223 / 134181.105)||/||(27240.97 / 88915.93)|
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 - (41094 + 176914) / 241413)||/||(1 - (42515.808 + 188952.349) / 257121.664)|
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))|
|=||(12605.582 / (12605.582 + 188952.349))||/||(12098.838 / (12098.838 + 176914))|
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)|
|=||(8031.595 / 88915.93)||/||(10805.342 / 134181.105)|
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)|
|=||((108991 + 30193) / 241413)||/||((111545.237 + 27926.333) / 257121.664)|
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|
|=||(-10630.953 - -17969.43||-||25080.421)||/||241413|
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.
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