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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 6 years, the highest Beneish M-Score of Sunoco LP was 6.56. The lowest was -3.91. And the median was -1.72.
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 * 0.7048||+||0.528 * 0.8953||+||0.404 * 1.4187||+||0.892 * 1.6282||+||0.115 * 1.4131|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0671||+||4.679 * -0.0315||-||0.327 * 0.8997|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $233 Mil.|
Revenue was 4052.167 + 3202.313 + 3674.624 + 4487.317 = $15,416 Mil.
Gross Profit was 580.567 + 498.743 + 333.216 + 381.147 = $1,794 Mil.
Total Current Assets was $1,030 Mil.
Total Assets was $8,762 Mil.
Property, Plant and Equipment(Net PPE) was $3,228 Mil.
Depreciation, Depletion and Amortization(DDA) was $221 Mil.
Selling, General & Admin. Expense(SGA) was $313 Mil.
Total Current Liabilities was $875 Mil.
Long-Term Debt was $4,189 Mil.
Net Income was 72.137 + 62.009 + 7.755 + 39.542 = $181 Mil.
Non Operating Income was -2.768 + -1.24 + -1.224 + -1.089 = $-6 Mil.
Cash Flow from Operations was 36.775 + 162.343 + 49.811 + 215.047 = $464 Mil.
|Accounts Receivable was $203 Mil.
Revenue was 5126.084 + 4342.388 + 0 + 0 = $9,468 Mil.
Gross Profit was 545.21 + 441.092 + 0 + 0 = $986 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 $137 Mil.
Selling, General & Admin. Expense(SGA) was $180 Mil.
Total Current Liabilities was $605 Mil.
Long-Term Debt was $1,694 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)|
|=||(232.673 / 15416.421)||/||(202.747 / 9468.472)|
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)|
|=||(986.302 / 9468.472)||/||(1793.673 / 15416.421)|
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 - (1030.475 + 3228.409) / 8761.554)||/||(1 - (905.649 + 1376.489) / 3578.343)|
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))|
|=||(136.943 / (136.943 + 1376.489))||/||(220.866 / (220.866 + 3228.409))|
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)|
|=||(312.714 / 15416.421)||/||(179.992 / 9468.472)|
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)|
|=||((4189.261 + 875.356) / 8761.554)||/||((1694.421 + 604.688) / 3578.343)|
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|
|=||(181.443 - -6.321||-||463.976)||/||8761.554|
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 -2.16 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