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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 Sempra Energy was -0.23. The lowest was -3.04. And the median was -2.53.
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 Sempra Energy 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 *||+||0.528 *||+||0.404 *||+||0.892 *||+||0.115 *|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 *||+||4.679 *||-||0.327 *|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $1,277 Mil.|
Revenue was 2622 + 2701 + 2481 + 2367 = $10,171 Mil.
Gross Profit was 1705 + 1752 + 1489 + 1515 = $6,461 Mil.
Total Current Assets was $2,883 Mil.
Total Assets was $41,835 Mil.
Property, Plant and Equipment(Net PPE) was $28,433 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,275 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $5,132 Mil.
Long-Term Debt was $12,975 Mil.
Net Income was 319 + 369 + 248 + 296 = $1,232 Mil.
Non Operating Income was 27 + 76 + 45 + 126 = $274 Mil.
Cash Flow from Operations was 592 + 816 + 870 + 408 = $2,686 Mil.
|Accounts Receivable was $1,256 Mil.
Revenue was 2682 + 2747 + 2815 + 2678 = $10,922 Mil.
Gross Profit was 1722 + 1611 + 1637 + 1544 = $6,514 Mil.
Total Current Assets was $3,656 Mil.
Total Assets was $39,551 Mil.
Property, Plant and Equipment(Net PPE) was $26,236 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,173 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $3,770 Mil.
Long-Term Debt was $13,012 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)|
|=||(1277 / 10171)||/||(1256 / 10922)|
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)|
|=||(6514 / 10922)||/||(6461 / 10171)|
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 - (2883 + 28433) / 41835)||/||(1 - (3656 + 26236) / 39551)|
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))|
|=||(1173 / (1173 + 26236))||/||(1275 / (1275 + 28433))|
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)|
|=||(0 / 10171)||/||(0 / 10922)|
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)|
|=||((12975 + 5132) / 41835)||/||((13012 + 3770) / 39551)|
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|
|=||(1232 - 274||-||2686)||/||41835|
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.
Sempra Energy has a M-score of signals that the company is likely to 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
Sempra Energy Annual Data
Sempra Energy Quarterly Data