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Beneish M-Score 0.24 higher than -2.22, which implies that it might have manipulated its financial results.
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 -2.69.
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 * 1.0605||+||0.528 * 9.1239||+||0.404 * 0.7655||+||0.892 * 0.6517||+||0.115 * 1.1299|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2036||+||4.679 * -0.2527||-||0.327 * 1.0581|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $1,139 Mil.|
Revenue was 2341 + 2572 + 2830 + 2900 = $10,643 Mil.
Gross Profit was -95 + -57 + 176 + 108 = $132 Mil.
Total Current Assets was $3,683 Mil.
Total Assets was $8,936 Mil.
Property, Plant and Equipment(Net PPE) was $4,395 Mil.
Depreciation, Depletion and Amortization(DDA) was $532 Mil.
Selling, General & Admin. Expense(SGA) was $382 Mil.
Total Current Liabilities was $2,193 Mil.
Long-Term Debt was $3,076 Mil.
Net Income was -340 + -1133 + -173 + -261 = $-1,907 Mil.
Non Operating Income was -13 + -34 + 1 + -2 = $-48 Mil.
Cash Flow from Operations was 113 + 51 + 93 + 142 = $399 Mil.
|Accounts Receivable was $1,648 Mil.
Revenue was 3272 + 4072 + 4587 + 4400 = $16,331 Mil.
Gross Profit was 206 + 600 + 739 + 303 = $1,848 Mil.
Total Current Assets was $5,742 Mil.
Total Assets was $11,544 Mil.
Property, Plant and Equipment(Net PPE) was $4,354 Mil.
Depreciation, Depletion and Amortization(DDA) was $605 Mil.
Selling, General & Admin. Expense(SGA) was $487 Mil.
Total Current Liabilities was $3,309 Mil.
Long-Term Debt was $3,124 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)|
|=||(1139 / 10643)||/||(1648 / 16331)|
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)|
|=||(-57 / 16331)||/||(-95 / 10643)|
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 - (3683 + 4395) / 8936)||/||(1 - (5742 + 4354) / 11544)|
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))|
|=||(605 / (605 + 4354))||/||(532 / (532 + 4395))|
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)|
|=||(382 / 10643)||/||(487 / 16331)|
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)|
|=||((3076 + 2193) / 8936)||/||((3124 + 3309) / 11544)|
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|
|=||(-1907 - -48||-||399)||/||8936|
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 0.24 signals that the company is likely to 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