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Beneish M-Score -0.5 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.
During the past 6 years, the highest Beneish M-Score of Sunoco LP was -0.50. The lowest was -2.35. 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 * 1.4975||+||0.528 * 0.2361||+||0.404 * 4.4432||+||0.892 * 2.0105||+||0.115 * 0.7881|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 3.184||+||4.679 * -0.0194||-||0.327 * 0.6269|
|This Year (Sep15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $223 Mil.|
Revenue was 4487.317 + 4205.985 + 1129.728 + 0 = $9,823 Mil.
Gross Profit was 381.147 + 236.773 + 87.049 + 0 = $705 Mil.
Total Current Assets was $1,050 Mil.
Total Assets was $6,180 Mil.
Property, Plant and Equipment(Net PPE) was $2,298 Mil.
Depreciation, Depletion and Amortization(DDA) was $144 Mil.
Selling, General & Admin. Expense(SGA) was $132 Mil.
Total Current Liabilities was $742 Mil.
Long-Term Debt was $2,443 Mil.
Net Income was 39.542 + 157.035 + 17.072 + 0 = $214 Mil.
Non Operating Income was -1.089 + -0.821 + -0.381 + 0 = $-2 Mil.
Cash Flow from Operations was 210.769 + 81.49 + 43.68 + 0 = $336 Mil.
|Accounts Receivable was $74 Mil.
Revenue was 1376.025 + 1216.587 + 1129.599 + 1163.716 = $4,886 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
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(223.156 / 9823.03)||/||(74.121 / 4885.927)|
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)|
|=||(236.773 / 4885.927)||/||(381.147 / 9823.03)|
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 - (1049.869 + 2298.004) / 6179.593)||/||(1 - (172.389 + 239.59) / 459.353)|
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))|
|=||(11.688 / (11.688 + 239.59))||/||(144.128 / (144.128 + 2298.004))|
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)|
|=||(131.554 / 9823.03)||/||(20.551 / 4885.927)|
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)|
|=||((2443.447 + 742.146) / 6179.593)||/||((235.776 + 141.949) / 459.353)|
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|
|=||(213.649 - -2.291||-||335.939)||/||6179.593|
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 -0.50 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