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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 -2.50.
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 * 1.1908||+||0.528 * 0.8872||+||0.404 * 1.184||+||0.892 * 0.7051||+||0.115 * 0.8929|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.3808||+||4.679 * -0.0409||-||0.327 * 0.9389|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $4,880 Mil.|
Revenue was 19584 + 15714 + 18777 + 22579 = $76,654 Mil.
Gross Profit was 1917 + 1470 + 1346 + 2800 = $7,533 Mil.
Total Current Assets was $16,180 Mil.
Total Assets was $45,452 Mil.
Property, Plant and Equipment(Net PPE) was $26,589 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,932 Mil.
Selling, General & Admin. Expense(SGA) was $700 Mil.
Total Current Liabilities was $8,652 Mil.
Long-Term Debt was $6,646 Mil.
Net Income was 814 + 495 + 298 + 1377 = $2,984 Mil.
Non Operating Income was 14 + 9 + 11 + 3 = $37 Mil.
Cash Flow from Operations was 2319 + 640 + 487 + 1362 = $4,808 Mil.
|Accounts Receivable was $5,812 Mil.
Revenue was 25118 + 21330 + 27859 + 34408 = $108,715 Mil.
Gross Profit was 2681 + 2083 + 2435 + 2280 = $9,479 Mil.
Total Current Assets was $18,492 Mil.
Total Assets was $47,599 Mil.
Property, Plant and Equipment(Net PPE) was $26,734 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,721 Mil.
Selling, General & Admin. Expense(SGA) was $719 Mil.
Total Current Liabilities was $9,865 Mil.
Long-Term Debt was $7,199 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)|
|=||(4880 / 76654)||/||(5812 / 108715)|
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)|
|=||(9479 / 108715)||/||(7533 / 76654)|
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 - (16180 + 26589) / 45452)||/||(1 - (18492 + 26734) / 47599)|
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))|
|=||(1721 / (1721 + 26734))||/||(1932 / (1932 + 26589))|
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)|
|=||(700 / 76654)||/||(719 / 108715)|
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)|
|=||((6646 + 8652) / 45452)||/||((7199 + 9865) / 47599)|
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|
|=||(2984 - 37||-||4808)||/||45452|
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 -2.80 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