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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 -1.96.
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 * 1.1906||+||0.528 * 0.9185||+||0.404 * 1.1189||+||0.892 * 0.97||+||0.115 * 1.2407|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0879||+||4.679 * -0.0261||-||0.327 * 1.1501|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $258 Mil.|
Revenue was 4137.317 + 4052.167 + 3202.313 + 2551.639 = $13,943 Mil.
Gross Profit was 577.387 + 580.567 + 498.743 + -61.037 = $1,596 Mil.
Total Current Assets was $1,061 Mil.
Total Assets was $8,997 Mil.
Property, Plant and Equipment(Net PPE) was $3,323 Mil.
Depreciation, Depletion and Amortization(DDA) was $233 Mil.
Selling, General & Admin. Expense(SGA) was $293 Mil.
Total Current Liabilities was $861 Mil.
Long-Term Debt was $4,473 Mil.
Net Income was 44.551 + 72.137 + 62.009 + -45.184 = $134 Mil.
Non Operating Income was -3.608 + -2.768 + -1.24 + -1.224 = $-9 Mil.
Cash Flow from Operations was 141.51 + 36.775 + 162.343 + 36.163 = $377 Mil.
|Accounts Receivable was $223 Mil.
Revenue was 4906.772 + 5126.084 + 4342.388 + 0 = $14,375 Mil.
Gross Profit was 524.758 + 545.21 + 441.092 + 0 = $1,511 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 $203 Mil.
Selling, General & Admin. Expense(SGA) was $278 Mil.
Total Current Liabilities was $742 Mil.
Long-Term Debt was $2,443 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)|
|=||(257.714 / 13943.436)||/||(223.156 / 14375.244)|
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)|
|=||(1511.06 / 14375.244)||/||(1595.66 / 13943.436)|
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 - (1061.253 + 3322.718) / 8997.001)||/||(1 - (1049.869 + 2298.004) / 6179.593)|
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))|
|=||(202.927 / (202.927 + 2298.004))||/||(232.51 / (232.51 + 3322.718))|
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)|
|=||(293.342 / 13943.436)||/||(277.986 / 14375.244)|
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)|
|=||((4473.43 + 860.66) / 8997.001)||/||((2443.447 + 742.146) / 6179.593)|
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|
|=||(133.513 - -8.84||-||376.791)||/||8997.001|
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 -2.49 suggests that the company will not 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