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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 2.19. The lowest was -90.16. And the median was -2.49.
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 * 1.309||+||0.528 * 0.7077||+||0.404 * 1.1633||+||0.892 * 0.6935||+||0.115 * 0.9171|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.4582||+||4.679 * -0.03||-||0.327 * 0.9112|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $4,518 Mil.|
Revenue was 15714 + 18777 + 22579 + 25118 = $82,188 Mil.
Gross Profit was 1470 + 1346 + 2800 + 2681 = $8,297 Mil.
Total Current Assets was $14,861 Mil.
Total Assets was $44,259 Mil.
Property, Plant and Equipment(Net PPE) was $26,745 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,886 Mil.
Selling, General & Admin. Expense(SGA) was $719 Mil.
Total Current Liabilities was $6,775 Mil.
Long-Term Debt was $7,207 Mil.
Net Income was 495 + 298 + 1377 + 1351 = $3,521 Mil.
Non Operating Income was 9 + 11 + 3 + 8 = $31 Mil.
Cash Flow from Operations was 640 + 487 + 1362 + 2329 = $4,818 Mil.
|Accounts Receivable was $4,977 Mil.
Revenue was 21330 + 27859 + 34408 + 34914 = $118,511 Mil.
Gross Profit was 2083 + 2435 + 2280 + 1669 = $8,467 Mil.
Total Current Assets was $16,788 Mil.
Total Assets was $45,741 Mil.
Property, Plant and Equipment(Net PPE) was $26,596 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,710 Mil.
Selling, General & Admin. Expense(SGA) was $711 Mil.
Total Current Liabilities was $8,634 Mil.
Long-Term Debt was $7,224 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)|
|=||(4518 / 82188)||/||(4977 / 118511)|
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)|
|=||(1346 / 118511)||/||(1470 / 82188)|
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 - (14861 + 26745) / 44259)||/||(1 - (16788 + 26596) / 45741)|
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))|
|=||(1710 / (1710 + 26596))||/||(1886 / (1886 + 26745))|
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)|
|=||(719 / 82188)||/||(711 / 118511)|
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)|
|=||((7207 + 6775) / 44259)||/||((7224 + 8634) / 45741)|
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|
|=||(3521 - 31||-||4818)||/||44259|
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 -2.76 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