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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 Valero Energy Corp was 2.16. The lowest was -90.19. And the median was -2.44.
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 Valero Energy Corp 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 * 0.8073||+||0.528 * 0.5683||+||0.404 * 1.0438||+||0.892 * 0.7051||+||0.115 * 0.9705|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.478||+||4.679 * -0.0288||-||0.327 * 0.854|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $4,698 Mil.|
Revenue was 22579 + 25118 + 21330 + 27859 = $96,886 Mil.
Gross Profit was 2800 + 2681 + 2083 + 2435 = $9,999 Mil.
Total Current Assets was $16,827 Mil.
Total Assets was $45,825 Mil.
Property, Plant and Equipment(Net PPE) was $26,688 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,773 Mil.
Selling, General & Admin. Expense(SGA) was $718 Mil.
Total Current Liabilities was $8,289 Mil.
Long-Term Debt was $7,252 Mil.
Net Income was 1377 + 1351 + 964 + 1155 = $4,847 Mil.
Non Operating Income was 3 + 8 + 24 + 9 = $44 Mil.
Cash Flow from Operations was 1362 + 2329 + 1433 + 997 = $6,121 Mil.
|Accounts Receivable was $8,254 Mil.
Revenue was 34408 + 34914 + 33663 + 34429 = $137,414 Mil.
Gross Profit was 2280 + 1669 + 1932 + 2178 = $8,059 Mil.
Total Current Assets was $19,666 Mil.
Total Assets was $48,455 Mil.
Property, Plant and Equipment(Net PPE) was $26,449 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,702 Mil.
Selling, General & Admin. Expense(SGA) was $689 Mil.
Total Current Liabilities was $13,460 Mil.
Long-Term Debt was $5,783 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)|
|=||(4698 / 96886)||/||(8254 / 137414)|
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)|
|=||(2681 / 137414)||/||(2800 / 96886)|
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 - (16827 + 26688) / 45825)||/||(1 - (19666 + 26449) / 48455)|
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))|
|=||(1702 / (1702 + 26449))||/||(1773 / (1773 + 26688))|
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)|
|=||(718 / 96886)||/||(689 / 137414)|
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)|
|=||((7252 + 8289) / 45825)||/||((5783 + 13460) / 48455)|
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|
|=||(4847 - 44||-||6121)||/||45825|
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.
Valero Energy Corp has a M-score of -3.30 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
Valero Energy Corp Annual Data
Valero Energy Corp Quarterly Data