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GuruFocus has detected 3 Warning Signs with Valero Energy Corp $VLO.
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Valero Energy Corp (NYSE:VLO)
Beneish M-Score
-2.22 (As of Today)

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.

Valero Energy Corp has a M-score of -2.22 suggests that the company is not a manipulator.

VLO' s Beneish M-Score Range Over the Past 10 Years
Min: -3.27   Max: -1.71
Current: -2.22

-3.27
-1.71

During the past 13 years, the highest Beneish M-Score of Valero Energy Corp was -1.71. The lowest was -3.27. And the median was -2.31.


Definition

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 * 1.6125+0.528 * 1.231+0.404 * 1.0582+0.892 * 0.8617+0.115 * 0.9664
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1687+4.679 * -0.056-0.327 * 1.0936
=-2.22

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $5,655 Mil.
Revenue was 20712 + 19649 + 19584 + 15714 = $75,659 Mil.
Gross Profit was 1296 + 1554 + 1917 + 1470 = $6,237 Mil.
Total Current Assets was $16,800 Mil.
Total Assets was $46,173 Mil.
Property, Plant and Equipment(Net PPE) was $26,472 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,894 Mil.
Selling, General & Admin. Expense(SGA) was $715 Mil.
Total Current Liabilities was $8,328 Mil.
Long-Term Debt was $7,886 Mil.
Net Income was 367 + 613 + 814 + 495 = $2,289 Mil.
Non Operating Income was 21 + 12 + 14 + 9 = $56 Mil.
Cash Flow from Operations was 998 + 863 + 2319 + 640 = $4,820 Mil.
Accounts Receivable was $4,070 Mil.
Revenue was 18777 + 22579 + 25118 + 21330 = $87,804 Mil.
Gross Profit was 1346 + 2800 + 2681 + 2083 = $8,910 Mil.
Total Current Assets was $14,898 Mil.
Total Assets was $44,227 Mil.
Property, Plant and Equipment(Net PPE) was $26,703 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,842 Mil.
Selling, General & Admin. Expense(SGA) was $710 Mil.
Total Current Liabilities was $6,994 Mil.
Long-Term Debt was $7,208 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(5655 / 75659) / (4070 / 87804)
=0.07474326 / 0.04635324
=1.6125

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(8910 / 87804) / (6237 / 75659)
=0.10147601 / 0.08243567
=1.231

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (16800 + 26472) / 46173) / (1 - (14898 + 26703) / 44227)
=0.06282893 / 0.05937549
=1.0582

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=75659 / 87804
=0.8617

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))
=(1842 / (1842 + 26703)) / (1894 / (1894 + 26472))
=0.06452969 / 0.06677008
=0.9664

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)
=(715 / 75659) / (710 / 87804)
=0.0094503 / 0.00808619
=1.1687

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)
=((7886 + 8328) / 46173) / ((7208 + 6994) / 44227)
=0.3511576 / 0.32111606
=1.0936

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(2289 - 56 - 4820) / 46173
=-0.056

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 -2.22 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Valero Energy Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.61290.31722.28610.95271.18460.88221.06140.67651.10841.6125
GMI 1.14271.58011.85230.7471.01010.86141.14370.73330.62631.231
AQI 0.95740.70750.82810.44681.0021.01081.24751.00341.22881.0582
SGI 1.08771.18680.5711.2731.53211.09850.99770.94760.67110.8617
DEPI 0.90820.92470.97691.08151.06241.0170.90041.05480.92140.9664
SGAI 0.96890.80560.75490.72930.70191.11281.08851.00791.46141.1687
LVGI 1.20530.84221.16141.02931.04880.91010.99190.84360.92811.0936
TATA -0.0045-0.1261-0.1074-0.0751-0.0465-0.0719-0.0683-0.0144-0.0377-0.056
M-score -1.87-3.27-1.81-2.94-2.00-2.89-2.59-2.98-3.02-2.22

Valero Energy Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.90490.67650.7460.92460.80731.10841.35941.20251.32091.6125
GMI 0.81530.73360.67860.57110.56830.62630.70770.88721.21021.231
AQI 1.08631.00341.05380.96021.04381.22881.16331.1841.23021.0582
SGI 0.99950.94760.85710.78130.70510.67110.69350.70510.76090.8617
DEPI 1.01991.05481.03081.02140.97050.92140.91710.89290.92270.9664
SGAI 0.89761.00791.11791.35531.4781.46141.45821.38081.3051.1687
LVGI 0.92250.84360.86920.92060.8540.92810.91120.93891.02691.0936
TATA -0.0493-0.0144-0.0376-0.0451-0.0288-0.0377-0.03-0.0409-0.0461-0.056
M-score -2.82-2.97-3.14-3.23-3.30-3.02-2.71-2.79-2.48-2.22
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