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GuruFocus has detected 2 Warning Signs with Petroleo Brasileiro SA Petrobras $PBR.
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Petroleo Brasileiro SA Petrobras (NYSE:PBR)
Beneish M-Score
-3.13 (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.

Petroleo Brasileiro SA Petrobras has a M-score of -2.98 suggests that the company is not a manipulator.

PBR' s Beneish M-Score Range Over the Past 10 Years
Min: -3.27   Max: -1.53
Current: -3.13

-3.27
-1.53

During the past 13 years, the highest Beneish M-Score of Petroleo Brasileiro SA Petrobras was -1.53. The lowest was -3.27. And the median was -2.59.


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 Petroleo Brasileiro SA Petrobras 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 * 0.8879+0.528 * 0.926+0.404 * 1.1093+0.892 * 0.9532+0.115 * 0.8566
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9541+4.679 * -0.0812-0.327 * 0.8986
=-2.98

* 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 $7,010 Mil.
Revenue was 21737 + 21403 + 21693 + 20320 = $85,153 Mil.
Gross Profit was 7563 + 6926 + 7187 + 6502 = $28,178 Mil.
Total Current Assets was $42,311 Mil.
Total Assets was $248,721 Mil.
Property, Plant and Equipment(Net PPE) was $179,660 Mil.
Depreciation, Depletion and Amortization(DDA) was $14,153 Mil.
Selling, General & Admin. Expense(SGA) was $7,625 Mil.
Total Current Liabilities was $24,767 Mil.
Long-Term Debt was $104,087 Mil.
Net Income was 1417 + 754 + -5380 + 106 = $-3,103 Mil.
Non Operating Income was -1397 + -230 + -8415 + -1937 = $-11,979 Mil.
Cash Flow from Operations was 7384 + 7209 + 8226 + 6251 = $29,070 Mil.
Accounts Receivable was $8,283 Mil.
Revenue was 17989 + 22147 + 23179 + 26021 = $89,336 Mil.
Gross Profit was 5373 + 6987 + 6695 + 8320 = $27,375 Mil.
Total Current Assets was $41,094 Mil.
Total Assets was $241,413 Mil.
Property, Plant and Equipment(Net PPE) was $176,914 Mil.
Depreciation, Depletion and Amortization(DDA) was $11,804 Mil.
Selling, General & Admin. Expense(SGA) was $8,384 Mil.
Total Current Liabilities was $30,193 Mil.
Long-Term Debt was $108,991 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)
=(7010 / 85153) / (8283 / 89336)
=0.08232241 / 0.09271738
=0.8879

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)
=(27375 / 89336) / (28178 / 85153)
=0.30642742 / 0.33091024
=0.926

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 - (42311 + 179660) / 248721) / (1 - (41094 + 176914) / 241413)
=0.10755023 / 0.09695004
=1.1093

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
=85153 / 89336
=0.9532

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))
=(11804.125 / (11804.125 + 176914)) / (14153 / (14153 + 179660))
=0.06254897 / 0.073024
=0.8566

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)
=(7625 / 85153) / (8384 / 89336)
=0.0895447 / 0.09384794
=0.9541

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)
=((104087 + 24767) / 248721) / ((108991 + 30193) / 241413)
=0.51806643 / 0.57653896
=0.8986

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
=(-3103 - -11979 - 29070) / 248721
=-0.0812

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.

Petroleo Brasileiro SA Petrobras has a M-score of -2.98 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.

Petroleo Brasileiro SA Petrobras Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.85430.75041.57961.01931.41610.90740.89460.79231.04041.047
GMI 1.02791.12680.86181.23871.13261.27681.07790.96940.77620.9602
AQI 1.4040.90060.94732.36270.86020.90750.65760.75031.15870.9584
SGI 1.21271.34790.77691.31111.21140.98760.98171.01550.67740.8365
DEPI 0.95110.94381.31451.05640.86481.0580.9410.97350.83820.9094
SGAI 1.02210.84741.20461.03830.82331.0290.94321.15381.01681.0911
LVGI 0.84791.27141.10060.75751.13731.08561.17171.15481.19930.8892
TATA -0.0578-0.0815-0.0501-0.0329-0.0332-0.0371-0.0385-0.036-0.0598-0.0753
M-score -2.48-2.82-2.51-1.58-2.08-2.67-2.92-3.02-3.15-2.96

Petroleo Brasileiro SA Petrobras Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.80130.63060.76690.87291.03221.30741.25451.3071.0470.8879
GMI 0.97910.90210.81260.77670.77750.82060.89030.9160.96020.926
AQI 0.75030.82130.80681.04951.15870.97171.05911.01390.95841.1093
SGI 1.00180.95420.86810.73440.68440.66840.68120.7670.83650.9532
DEPI 1.0020.82860.860.74530.82010.99190.92990.93560.90590.8566
SGAI 1.19281.11051.20390.95850.98331.16461.12571.29291.13860.9541
LVGI 1.15481.17521.22141.26951.19931.06320.99130.91480.88920.8986
TATA -0.0892-0.1077-0.1085-0.1143-0.0606-0.0622-0.0529-0.06-0.0762-0.0812
M-score -3.27-3.58-3.62-3.58-3.15-2.94-2.84-2.75-2.98-2.98
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