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GuruFocus has detected 7 Warning Signs with Energy Company of Minas Gerais $CIG.
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Energy Company of Minas Gerais (NYSE:CIG)
Beneish M-Score
-2.49 (As of Today)

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.

Energy Company of Minas Gerais has a M-score of -2.31 suggests that the company is not a manipulator.

CIG' s Beneish M-Score Range Over the Past 10 Years
Min: -3.68   Max: -1.61
Current: -2.49

-3.68
-1.61

During the past 13 years, the highest Beneish M-Score of Energy Company of Minas Gerais was -1.61. The lowest was -3.68. And the median was -2.22.


Definition

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 Energy Company of Minas Gerais 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 * 1.2128+0.528 * 1.2213+0.404 * 1.0579+0.892 * 0.8679+0.115 * 1.079
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.2422+4.679 * -0.005-0.327 * 0.9652
=-2.31

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $1,021 Mil.
Revenue was 1393.23196184 + 1504.45499816 + 1388.7208623 + 1203.80205516 = $5,490 Mil.
Gross Profit was -311.52236136 + 995.467847043 + 328.670911959 + 356.391833423 = $1,369 Mil.
Total Current Assets was $2,470 Mil.
Total Assets was $12,533 Mil.
Property, Plant and Equipment(Net PPE) was $1,126 Mil.
Depreciation, Depletion and Amortization(DDA) was $244 Mil.
Selling, General & Admin. Expense(SGA) was $362 Mil.
Total Current Liabilities was $3,413 Mil.
Long-Term Debt was $3,083 Mil.
Net Income was -91.4022063208 + 133.221750891 + 59.0193959222 + 1.38426176312 = $102 Mil.
Non Operating Income was 200.546213476 + -432.930960285 + 76.705030087 + -27.4432125473 = $-183 Mil.
Cash Flow from Operations was -389.982110912 + 287.756055576 + 287.68826313 + 162.249864792 = $348 Mil.
Accounts Receivable was $970 Mil.
Revenue was 1505.45377242 + 1225.6292273 + 1732.96911656 + 1861.99751703 = $6,326 Mil.
Gross Profit was 401.304370233 + 290.766038123 + 484.027380532 + 750.465397593 = $1,927 Mil.
Total Current Assets was $2,416 Mil.
Total Assets was $10,528 Mil.
Property, Plant and Equipment(Net PPE) was $1,015 Mil.
Depreciation, Depletion and Amortization(DDA) was $241 Mil.
Selling, General & Admin. Expense(SGA) was $336 Mil.
Total Current Liabilities was $3,369 Mil.
Long-Term Debt was $2,285 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(1021.16875373 / 5490.20987746) / (970.160791589 / 6326.04963331)
=0.18599813 / 0.15335966
=1.2128

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(1926.56318648 / 6326.04963331) / (1369.00823107 / 5490.20987746)
=0.30454443 / 0.24935444
=1.2213

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (2470.48300537 + 1125.52176506) / 12533.0948122) / (1 - (2416.25438054 + 1015.25458668) / 10527.9839208)
=0.71307927 / 0.6740583
=1.0579

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=5490.20987746 / 6326.04963331
=0.8679

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))
=(241.419110503 / (241.419110503 + 1015.25458668)) / (243.800648212 / (243.800648212 + 1125.52176506))
=0.19210962 / 0.17804474
=1.079

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)
=(362.224399363 / 5490.20987746) / (335.985167152 / 6326.04963331)
=0.06597642 / 0.05311137
=1.2422

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)
=((3083.48240906 + 3412.9397734) / 12533.0948122) / ((2284.8381777 + 3368.89301175) / 10527.9839208)
=0.51834142 / 0.53701936
=0.9652

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(102.223202256 - -183.122929269 - 347.712072586) / 12533.0948122
=-0.005

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.

Energy Company of Minas Gerais has a M-score of -2.31 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Energy Company of Minas Gerais Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.85980.66161.6140.82841.10671.43910.45190.81621.54321.2128
GMI 0.97941.07471.49641.16710.67871.05881.58670.78551.26511.2213
AQI 0.86670.9862.2641.16121.04451.01251.07211.12581.03011.0579
SGI 1.46771.12760.90071.23840.93871.03250.8751.21940.77540.8679
DEPI 00.16580.71350.98381.05480.77660.88570.95350.71931.079
SGAI 0.70281.12340.69060.35537.01981.1450.26650.83941.06561.2422
LVGI 0.97860.96541.19571.06971.04440.9350.85721.18891.02480.9652
TATA 0.0468-0.0814-0.0105-0.0285-0.0562-0.0545-0.0645-0.019-0.0403-0.005
M-score -2.09-3.13-1.32-2.32-3.89-2.30-2.90-2.64-2.27-2.31

Energy Company of Minas Gerais Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.81620.96571.54321.28711.2128
GMI 0.78551.10791.26511.29661.2213
AQI 1.12580.8441.03011.41711.0579
SGI 1.21941.02680.77540.70020.8679
DEPI 0.95350.7430.71931.02691.079
SGAI 0.83940.93251.06560.97561.2422
LVGI 1.18890.98681.02481.08990.9652
TATA -0.019-0.0053-0.0403-0.0749-0.005
M-score -2.64-2.53-2.27-2.53-2.31
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