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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 -2.38.
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 * 0.9105||+||0.528 * 0.7998||+||0.404 * 1.0863||+||0.892 * 0.9933||+||0.115 * 1.0199|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9032||+||4.679 * -0.0493||-||0.327 * 0.9225|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $8,254 Mil.|
Revenue was 34408 + 34914 + 33663 + 34429 = $137,414 Mil.
Gross Profit was 2280 + 1669 + 1931 + 2184 = $8,064 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.
Net Income was 1059 + 588 + 828 + 1288 = $3,763 Mil.
Non Operating Income was 11 + 12 + 15 + 342 = $380 Mil.
Cash Flow from Operations was 1866 + 1134 + 244 + 2529 = $5,773 Mil.
|Accounts Receivable was $9,126 Mil.
Revenue was 36137 + 34034 + 33474 + 34695 = $138,340 Mil.
Gross Profit was 1150 + 1443 + 1667 + 2233 = $6,493 Mil.
Total Current Assets was $18,593 Mil.
Total Assets was $46,293 Mil.
Property, Plant and Equipment(Net PPE) was $25,642 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,685 Mil.
Selling, General & Admin. Expense(SGA) was $768 Mil.
Total Current Liabilities was $13,668 Mil.
Long-Term Debt was $6,261 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)|
|=||(8254 / 137414)||/||(9126 / 138340)|
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)|
|=||(1669 / 138340)||/||(2280 / 137414)|
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 - (19666 + 26449) / 48455)||/||(1 - (18593 + 25642) / 46293)|
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))|
|=||(1685 / (1685 + 25642))||/||(1702 / (1702 + 26449))|
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)|
|=||(689 / 137414)||/||(768 / 138340)|
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)|
|=||((5783 + 13460) / 48455)||/||((6261 + 13668) / 46293)|
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|
|=||(3763 - 380||-||5773)||/||48455|
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 -2.83 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