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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.
Sunoco LP has a M-score of -1.31 signals that the company is a manipulator.
During the past 5 years, the highest Beneish M-Score of Sunoco LP was -1.28. The lowest was -2.04. And the median was -1.32.
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 Sunoco LP 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 * 1.325||+||0.528 * 0.8517||+||0.404 * 3.0694||+||0.892 * 0.8367||+||0.115 * 1.3181|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1858||+||4.679 * 0.0122||-||0.327 * 0.3997|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $69 Mil.|
Revenue was 0 + 1376.025 + 1216.587 + 1114.468 = $3,707 Mil.
Gross Profit was 0 + 22.203 + 22.12 + 20.049 = $64 Mil.
Total Current Assets was $157 Mil.
Total Assets was $1,300 Mil.
Property, Plant and Equipment(Net PPE) was $285 Mil.
Depreciation, Depletion and Amortization(DDA) was $9 Mil.
Selling, General & Admin. Expense(SGA) was $16 Mil.
Total Current Liabilities was $135 Mil.
Long-Term Debt was $273 Mil.
Net Income was 0 + 9.595 + 10.132 + 9.523 = $29 Mil.
Non Operating Income was 0 + -0.13 + 0 + -0.095 = $-0 Mil.
Cash Flow from Operations was 0 + 46.035 + -34.216 + 1.818 = $14 Mil.
|Accounts Receivable was $63 Mil.
Revenue was 1166.797 + 1120.897 + 1090.417 + 1052.631 = $4,431 Mil.
Gross Profit was 18.403 + 16.956 + 15.556 + 14.611 = $66 Mil.
Total Current Assets was $133 Mil.
Total Assets was $385 Mil.
Property, Plant and Equipment(Net PPE) was $169 Mil.
Depreciation, Depletion and Amortization(DDA) was $7 Mil.
Selling, General & Admin. Expense(SGA) was $16 Mil.
Total Current Liabilities was $118 Mil.
Long-Term Debt was $184 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)|
|=||(69.484 / 3707.08)||/||(62.68 / 4430.742)|
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)|
|=||(22.203 / 4430.742)||/||(0 / 3707.08)|
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 - (156.856 + 284.804) / 1299.813)||/||(1 - (133.192 + 169.3) / 385.386)|
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))|
|=||(7.328 / (7.328 + 169.3))||/||(9.256 / (9.256 + 284.804))|
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)|
|=||(15.961 / 3707.08)||/||(16.088 / 4430.742)|
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)|
|=||((273.03 + 134.888) / 1299.813)||/||((184.222 + 118.354) / 385.386)|
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|
|=||(29.25 - -0.225||-||13.637)||/||1299.813|
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.
Sunoco LP has a M-score of -1.31 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
Sunoco LP Annual Data
Sunoco LP Quarterly Data