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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 -2.41.
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 * 0.746||+||0.528 * 0.6786||+||0.404 * 1.0538||+||0.892 * 0.8571||+||0.115 * 1.0308|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1179||+||4.679 * -0.0376||-||0.327 * 0.8692|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|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.
Net Income was 964 + 1155 + 1059 + 588 = $3,766 Mil.
Non Operating Income was 24 + 9 + 11 + 12 = $56 Mil.
Cash Flow from Operations was 1433 + 997 + 1866 + 1134 = $5,430 Mil.
|Accounts Receivable was $7,783 Mil.
Revenue was 33663 + 34429 + 36137 + 34034 = $138,263 Mil.
Gross Profit was 1932 + 2178 + 1150 + 1443 = $6,703 Mil.
Total Current Assets was $19,030 Mil.
Total Assets was $47,099 Mil.
Property, Plant and Equipment(Net PPE) was $25,766 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,711 Mil.
Selling, General & Admin. Expense(SGA) was $742 Mil.
Total Current Liabilities was $12,926 Mil.
Long-Term Debt was $5,860 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)|
|=||(4977 / 118511)||/||(7783 / 138263)|
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)|
|=||(2435 / 138263)||/||(2083 / 118511)|
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 - (16788 + 26596) / 45741)||/||(1 - (19030 + 25766) / 47099)|
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))|
|=||(1711 / (1711 + 25766))||/||(1710 / (1710 + 26596))|
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)|
|=||(711 / 118511)||/||(742 / 138263)|
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)|
|=||((7224 + 8634) / 45741)||/||((5860 + 12926) / 47099)|
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|
|=||(3766 - 56||-||5430)||/||45741|
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 -3.14 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