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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 0.00. The lowest was -3.27. And the median was -2.39.
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 * 1.3209||+||0.528 * 1.2102||+||0.404 * 1.2302||+||0.892 * 0.7609||+||0.115 * 0.9227|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.305||+||4.679 * -0.0461||-||0.327 * 1.0269|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $4,722 Mil.|
Revenue was 19649 + 19584 + 15714 + 18777 = $73,724 Mil.
Gross Profit was 1554 + 1917 + 1470 + 1346 = $6,287 Mil.
Total Current Assets was $16,878 Mil.
Total Assets was $46,265 Mil.
Property, Plant and Equipment(Net PPE) was $26,518 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,920 Mil.
Selling, General & Admin. Expense(SGA) was $713 Mil.
Total Current Liabilities was $8,224 Mil.
Long-Term Debt was $7,888 Mil.
Net Income was 613 + 814 + 495 + 298 = $2,220 Mil.
Non Operating Income was 12 + 14 + 9 + 11 = $46 Mil.
Cash Flow from Operations was 863 + 2319 + 640 + 487 = $4,309 Mil.
|Accounts Receivable was $4,698 Mil.
Revenue was 22579 + 25118 + 21330 + 27859 = $96,886 Mil.
Gross Profit was 2800 + 2681 + 2083 + 2435 = $9,999 Mil.
Total Current Assets was $16,827 Mil.
Total Assets was $45,825 Mil.
Property, Plant and Equipment(Net PPE) was $26,688 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,773 Mil.
Selling, General & Admin. Expense(SGA) was $718 Mil.
Total Current Liabilities was $8,289 Mil.
Long-Term Debt was $7,252 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)|
|=||(4722 / 73724)||/||(4698 / 96886)|
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)|
|=||(9999 / 96886)||/||(6287 / 73724)|
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 - (16878 + 26518) / 46265)||/||(1 - (16827 + 26688) / 45825)|
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))|
|=||(1773 / (1773 + 26688))||/||(1920 / (1920 + 26518))|
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)|
|=||(713 / 73724)||/||(718 / 96886)|
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)|
|=||((7888 + 8224) / 46265)||/||((7252 + 8289) / 45825)|
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|
|=||(2220 - 46||-||4309)||/||46265|
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 -2.48 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