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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 13 years, the highest Beneish M-Score of Sunoco Logistics Partners LP was -1.07. The lowest was -3.03. And the median was -2.36.
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 Logistics Partners 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 * 1.5295||+||0.528 * 0.8552||+||0.404 * 1.0084||+||0.892 * 0.8727||+||0.115 * 0.9877|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2238||+||4.679 * -0.0138||-||0.327 * 1.0706|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $1,555 Mil.|
Revenue was 2917 + 2189 + 2268 + 1777 = $9,151 Mil.
Gross Profit was 226 + 334 + 277 + 364 = $1,201 Mil.
Total Current Assets was $2,906 Mil.
Total Assets was $18,849 Mil.
Property, Plant and Equipment(Net PPE) was $12,324 Mil.
Depreciation, Depletion and Amortization(DDA) was $446 Mil.
Selling, General & Admin. Expense(SGA) was $110 Mil.
Total Current Liabilities was $2,138 Mil.
Long-Term Debt was $7,313 Mil.
Net Income was 204 + 154 + 202 + 145 = $705 Mil.
Non Operating Income was 51 + 12 + 8 + 7 = $78 Mil.
Cash Flow from Operations was 360 + 153 + 255 + 120 = $888 Mil.
|Accounts Receivable was $1,165 Mil.
Revenue was 2305 + 2407 + 3202 + 2572 = $10,486 Mil.
Gross Profit was 192 + 366 + 365 + 254 = $1,177 Mil.
Total Current Assets was $1,848 Mil.
Total Assets was $15,489 Mil.
Property, Plant and Equipment(Net PPE) was $10,692 Mil.
Depreciation, Depletion and Amortization(DDA) was $382 Mil.
Selling, General & Admin. Expense(SGA) was $103 Mil.
Total Current Liabilities was $1,663 Mil.
Long-Term Debt was $5,591 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)|
|=||(1555 / 9151)||/||(1165 / 10486)|
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)|
|=||(1177 / 10486)||/||(1201 / 9151)|
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 - (2906 + 12324) / 18849)||/||(1 - (1848 + 10692) / 15489)|
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))|
|=||(382 / (382 + 10692))||/||(446 / (446 + 12324))|
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)|
|=||(110 / 9151)||/||(103 / 10486)|
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)|
|=||((7313 + 2138) / 18849)||/||((5591 + 1663) / 15489)|
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|
|=||(705 - 78||-||888)||/||18849|
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 Logistics Partners LP has a M-score of -2.31 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 Logistics Partners LP Annual Data
Sunoco Logistics Partners LP Quarterly Data