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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 Apache Corp was -1.65. The lowest was -5.93. And the median was -2.74.
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 Apache 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 * 1.1642||+||0.528 * 1.0268||+||0.404 * 0.5114||+||0.892 * 0.7732||+||0.115 * 1.122|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.4027||+||4.679 * -0.1866||-||0.327 * 1.1141|
* 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 $1,128 Mil.|
Revenue was 1451 + 1438 + 1382 + 1052 = $5,323 Mil.
Gross Profit was 1031 + 1005 + 971 + 622 = $3,629 Mil.
Total Current Assets was $3,241 Mil.
Total Assets was $22,519 Mil.
Property, Plant and Equipment(Net PPE) was $18,867 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,618 Mil.
Selling, General & Admin. Expense(SGA) was $410 Mil.
Total Current Liabilities was $1,843 Mil.
Long-Term Debt was $8,544 Mil.
Net Income was -182 + -607 + -244 + -489 = $-1,522 Mil.
Non Operating Income was 102 + 100 + 102 + -54 = $250 Mil.
Cash Flow from Operations was 796 + 651 + 707 + 276 = $2,430 Mil.
|Accounts Receivable was $1,253 Mil.
Revenue was 1482 + 1526 + 2246 + 1630 = $6,884 Mil.
Gross Profit was 978 + 1018 + 1730 + 1093 = $4,819 Mil.
Total Current Assets was $3,752 Mil.
Total Assets was $25,500 Mil.
Property, Plant and Equipment(Net PPE) was $20,838 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,300 Mil.
Selling, General & Admin. Expense(SGA) was $378 Mil.
Total Current Liabilities was $1,841 Mil.
Long-Term Debt was $8,716 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)|
|=||(1128 / 5323)||/||(1253 / 6884)|
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)|
|=||(4819 / 6884)||/||(3629 / 5323)|
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 - (3241 + 18867) / 22519)||/||(1 - (3752 + 20838) / 25500)|
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))|
|=||(3300 / (3300 + 20838))||/||(2618 / (2618 + 18867))|
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)|
|=||(410 / 5323)||/||(378 / 6884)|
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)|
|=||((8544 + 1843) / 22519)||/||((8716 + 1841) / 25500)|
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|
|=||(-1522 - 250||-||2430)||/||22519|
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.
Apache Corp has a M-score of -3.68 suggests that the company will not 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
Apache Corp Annual Data
Apache Corp Quarterly Data