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GuruFocus has detected 3 Warning Signs with Plains All American Pipeline LP $PAA.
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Plains All American Pipeline LP (NYSE:PAA)
Beneish M-Score
-2.14 (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.

Plains All American Pipeline LP has a M-score of -2.14 signals that the company is a manipulator.

PAA' s Beneish M-Score Range Over the Past 10 Years
Min: -3.31   Max: -0.5
Current: -2.14

-3.31
-0.5

During the past 13 years, the highest Beneish M-Score of Plains All American Pipeline LP was -0.50. The lowest was -3.31. And the median was -2.44.


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 Plains All American Pipeline LP 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 * 1.3427+0.528 * 0.9598+0.404 * 1.0562+0.892 * 1.0665+0.115 * 0.9103
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0044+4.679 * -0.0043-0.327 * 1.0138
=-2.14

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

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $2,218 Mil.
Revenue was 6667 + 5951 + 5170 + 4950 = $22,738 Mil.
Gross Profit was 786 + 429 + 452 + 423 = $2,090 Mil.
Total Current Assets was $4,210 Mil.
Total Assets was $25,269 Mil.
Property, Plant and Equipment(Net PPE) was $14,060 Mil.
Depreciation, Depletion and Amortization(DDA) was $501 Mil.
Selling, General & Admin. Expense(SGA) was $286 Mil.
Total Current Liabilities was $4,156 Mil.
Long-Term Debt was $9,879 Mil.
Net Income was 444 + 215 + 264 + 101 = $1,024 Mil.
Non Operating Income was 48 + 49 + 63 + 65 = $225 Mil.
Cash Flow from Operations was 816 + 84 + 255 + -248 = $907 Mil.
Accounts Receivable was $1,549 Mil.
Revenue was 4111 + 4996 + 5551 + 6663 = $21,321 Mil.
Gross Profit was 463 + 518 + 502 + 398 = $1,881 Mil.
Total Current Assets was $2,780 Mil.
Total Assets was $22,297 Mil.
Property, Plant and Equipment(Net PPE) was $13,670 Mil.
Depreciation, Depletion and Amortization(DDA) was $442 Mil.
Selling, General & Admin. Expense(SGA) was $267 Mil.
Total Current Liabilities was $3,063 Mil.
Long-Term Debt was $9,153 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)
=(2218 / 22738) / (1549 / 21321)
=0.09754596 / 0.07265138
=1.3427

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)
=(1881 / 21321) / (2090 / 22738)
=0.08822288 / 0.09191662
=0.9598

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 - (4210 + 14060) / 25269) / (1 - (2780 + 13670) / 22297)
=0.2769797 / 0.26223259
=1.0562

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
=22738 / 21321
=1.0665

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))
=(442 / (442 + 13670)) / (501 / (501 + 14060))
=0.03132086 / 0.03440698
=0.9103

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)
=(286 / 22738) / (267 / 21321)
=0.01257806 / 0.01252286
=1.0044

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)
=((9879 + 4156) / 25269) / ((9153 + 3063) / 22297)
=0.55542364 / 0.5478764
=1.0138

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
=(1024 - 225 - 907) / 25269
=-0.0043

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.

Plains All American Pipeline LP has a M-score of -2.14 signals that the company is likely to 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.

Plains All American Pipeline LP Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.63360.4042.39810.87170.87761.01290.91340.69871.28151.4646
GMI 0.62051.31880.48521.33390.9220.90361.01981.01030.67770.9729
AQI 0.93041.29390.8061.00541.11411.08040.97281.15171.01290.9554
SGI 0.90861.47390.61611.39821.32371.10281.11781.02880.53270.8717
DEPI 0.65730.98281.11560.97391.18230.65471.45871.07560.97670.9034
SGAI 1.34940.66072.13040.88550.85431.05490.93910.881.60591.1513
LVGI 0.9890.96661.03431.00680.90951.01850.99591.0181.01990.9878
TATA -0.045-0.04650.01470.0183-0.0904-0.0099-0.0323-0.0327-0.0277-0.0071
M-score -2.51-2.47-2.01-1.96-2.65-2.50-2.54-2.79-3.05-2.27

Plains All American Pipeline LP Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.69870.56340.960.84631.28151.50831.26891.51571.46461.3427
GMI 1.01030.83950.77120.69030.67770.71660.69060.80690.97290.9598
AQI 1.15171.19421.1781.23261.01290.98440.99630.94740.95541.0562
SGI 1.02880.87090.75070.61860.53270.56520.59080.69630.87171.0665
DEPI 1.07561.07961.08531.06730.97670.9720.78130.91670.90340.9103
SGAI 0.881.05421.18371.3551.60591.50451.45811.36571.15131.0044
LVGI 1.0180.94690.99591.00281.01990.96810.9810.96360.98781.0138
TATA -0.0327-0.0346-0.0318-0.0479-0.0277-0.0279-0.0207-0.0077-0.0071-0.0043
M-score -2.79-3.15-2.96-3.31-3.05-2.77-2.96-2.50-2.27-2.14
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