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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 -2.67.
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 * 1.1992||+||0.528 * 5.455||+||0.404 * 0.7994||+||0.892 * 0.6963||+||0.115 * 1.0654|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0795||+||4.679 * -0.2398||-||0.327 * 1.0601|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $1,250 Mil.|
Revenue was 2584 + 2341 + 2572 + 2830 = $10,327 Mil.
Gross Profit was 187 + -95 + -57 + 176 = $211 Mil.
Total Current Assets was $3,777 Mil.
Total Assets was $8,941 Mil.
Property, Plant and Equipment(Net PPE) was $4,306 Mil.
Depreciation, Depletion and Amortization(DDA) was $523 Mil.
Selling, General & Admin. Expense(SGA) was $339 Mil.
Total Current Liabilities was $2,323 Mil.
Long-Term Debt was $3,058 Mil.
Net Income was -46 + -340 + -1133 + -173 = $-1,692 Mil.
Non Operating Income was -23 + -13 + -34 + 1 = $-69 Mil.
Cash Flow from Operations was 200 + 113 + 51 + 157 = $521 Mil.
|Accounts Receivable was $1,497 Mil.
Revenue was 2900 + 3272 + 4072 + 4587 = $14,831 Mil.
Gross Profit was 108 + 206 + 600 + 739 = $1,653 Mil.
Total Current Assets was $5,436 Mil.
Total Assets was $11,213 Mil.
Property, Plant and Equipment(Net PPE) was $4,431 Mil.
Depreciation, Depletion and Amortization(DDA) was $578 Mil.
Selling, General & Admin. Expense(SGA) was $451 Mil.
Total Current Liabilities was $3,242 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)|
|=||(1250 / 10327)||/||(1497 / 14831)|
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)|
|=||(1653 / 14831)||/||(211 / 10327)|
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 - (3777 + 4306) / 8941)||/||(1 - (5436 + 4431) / 11213)|
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))|
|=||(578 / (578 + 4431))||/||(523 / (523 + 4306))|
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)|
|=||(339 / 10327)||/||(451 / 14831)|
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)|
|=||((3058 + 2323) / 8941)||/||((3124 + 3242) / 11213)|
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|
|=||(-1692 - -69||-||521)||/||8941|
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 -1.44 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