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Sunoco LP (NYSE:SUN)
Beneish M-Score
-0.68 (As of Today)

Warning Sign:

Beneish M-Score -0.68 higher than -2.22, which implies that it might have manipulated its financial results.

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 -0.68 signals that the company is a manipulator.

SUN' s 10-Year Beneish M-Score Range
Min: -2.03   Max: -0.68
Current: -0.68

-2.03
-0.68

During the past 5 years, the highest Beneish M-Score of Sunoco LP was -0.68. The lowest was -2.03. And the median was -1.30.


Definition

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 * 2.0669+0.528 * 0.3186+0.404 * 3.5124+0.892 * 1.3234+0.115 * 1.0157
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 2.5885+4.679 * 0.0164-0.327 * 0.7814
=-0.68

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $203 Mil.
Revenue was 4205.985 + 1129.728 + 1114.468 + 0 = $6,450 Mil.
Gross Profit was 236.773 + 87.049 + 20.049 + 0 = $344 Mil.
Total Current Assets was $906 Mil.
Total Assets was $3,578 Mil.
Property, Plant and Equipment(Net PPE) was $1,376 Mil.
Depreciation, Depletion and Amortization(DDA) was $66 Mil.
Selling, General & Admin. Expense(SGA) was $70 Mil.
Total Current Liabilities was $605 Mil.
Long-Term Debt was $1,694 Mil.
Net Income was 157.035 + 17.072 + 9.523 + 0 = $184 Mil.
Non Operating Income was 0 + -0.381 + 0 + 0 = $-0 Mil.
Cash Flow from Operations was 81.49 + 43.68 + 0 + 0 = $125 Mil.
Accounts Receivable was $74 Mil.
Revenue was 1376.025 + 1216.587 + 1114.468 + 1166.797 = $4,874 Mil.
Gross Profit was 22.203 + 22.12 + 20.049 + 18.403 = $83 Mil.
Total Current Assets was $172 Mil.
Total Assets was $459 Mil.
Property, Plant and Equipment(Net PPE) was $240 Mil.
Depreciation, Depletion and Amortization(DDA) was $12 Mil.
Selling, General & Admin. Expense(SGA) was $21 Mil.
Total Current Liabilities was $142 Mil.
Long-Term Debt was $236 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(202.747 / 6450.181) / (74.121 / 4873.877)
=0.03143276 / 0.01520781
=2.0669

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(87.049 / 4873.877) / (236.773 / 6450.181)
=0.0169834 / 0.05331184
=0.3186

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (905.649 + 1376.489) / 3578.343) / (1 - (172.389 + 239.59) / 459.353)
=0.3622361 / 0.10313201
=3.5124

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=6450.181 / 4873.877
=1.3234

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))
=(11.688 / (11.688 + 239.59)) / (66.063 / (66.063 + 1376.489))
=0.04651422 / 0.04579592
=1.0157

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)
=(70.402 / 6450.181) / (20.551 / 4873.877)
=0.01091473 / 0.00421656
=2.5885

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)
=((1694.421 + 604.688) / 3578.343) / ((235.776 + 141.949) / 459.353)
=0.6425066 / 0.82229788
=0.7814

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(183.63 - -0.381 - 125.17) / 3578.343
=0.0164

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 -0.68 signals that the company is likely to be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Sunoco LP Annual Data

Dec10Dec11Dec12Dec13Dec14
DSRI 0.8039
GMI 1
AQI 2.6401
SGI 1
DEPI 4.8415
SGAI 1
LVGI 0.5829
TATA 0.0168
M-score -1.34

Sunoco LP Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 2.22181.66811.31471.44440.72642.0669
GMI 0.7850.80710.85170.90970.470.3186
AQI 0.25760.30353.06942.64954.58643.5124
SGI 1.06441.11440.83670.82520.78381.3234
DEPI 1.45411.14181.31814.54671.90741.0157
SGAI 1.11171.18131.18581.0852.50762.5885
LVGI 1.03431.03830.39970.5810.56570.7814
TATA 0.0880.03080.01220.0079-0.0240.0164
M-score -1.28-2.03-1.32-1.04-1.88-0.68
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