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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 United States Steel Corp was 70.61. The lowest was -30.41. And the median was -2.68.
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 United States Steel 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 * 1.1502||+||0.528 * 2.3517||+||0.404 * 0.7122||+||0.892 * 0.7789||+||0.115 * 1.0315|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9456||+||4.679 * -0.2177||-||0.327 * 0.9854|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $1,196 Mil.|
Revenue was 2686 + 2584 + 2341 + 2572 = $10,183 Mil.
Gross Profit was 326 + 187 + -95 + -57 = $361 Mil.
Total Current Assets was $4,411 Mil.
Total Assets was $9,467 Mil.
Property, Plant and Equipment(Net PPE) was $4,218 Mil.
Depreciation, Depletion and Amortization(DDA) was $513 Mil.
Selling, General & Admin. Expense(SGA) was $313 Mil.
Total Current Liabilities was $2,397 Mil.
Long-Term Debt was $2,988 Mil.
Net Income was 51 + -46 + -340 + -1133 = $-1,468 Mil.
Non Operating Income was -20 + -23 + -13 + -34 = $-90 Mil.
Cash Flow from Operations was 264 + 200 + 113 + 106 = $683 Mil.
|Accounts Receivable was $1,335 Mil.
Revenue was 2830 + 2900 + 3272 + 4072 = $13,074 Mil.
Gross Profit was 176 + 108 + 206 + 600 = $1,090 Mil.
Total Current Assets was $5,385 Mil.
Total Assets was $11,191 Mil.
Property, Plant and Equipment(Net PPE) was $4,415 Mil.
Depreciation, Depletion and Amortization(DDA) was $556 Mil.
Selling, General & Admin. Expense(SGA) was $425 Mil.
Total Current Liabilities was $3,333 Mil.
Long-Term Debt was $3,127 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)|
|=||(1196 / 10183)||/||(1335 / 13074)|
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)|
|=||(1090 / 13074)||/||(361 / 10183)|
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 - (4411 + 4218) / 9467)||/||(1 - (5385 + 4415) / 11191)|
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))|
|=||(556 / (556 + 4415))||/||(513 / (513 + 4218))|
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)|
|=||(313 / 10183)||/||(425 / 13074)|
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)|
|=||((2988 + 2397) / 9467)||/||((3127 + 3333) / 11191)|
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|
|=||(-1468 - -90||-||683)||/||9467|
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.
United States Steel Corp has a M-score of -2.94 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
United States Steel Corp Annual Data
United States Steel Corp Quarterly Data