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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 -0.64. The lowest was -8.14. And the median was -2.77.
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 * 1.2313||+||0.528 * 1.1941||+||0.404 * 0.8785||+||0.892 * 0.5193||+||0.115 * 0.4041|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.7299||+||4.679 * -0.6553||-||0.327 * 1.2375|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $1,016 Mil.|
Revenue was 1382 + 1052 + 1263 + 1496 = $5,193 Mil.
Gross Profit was 971 + 622 + 759 + 988 = $3,340 Mil.
Total Current Assets was $3,292 Mil.
Total Assets was $24,346 Mil.
Property, Plant and Equipment(Net PPE) was $20,143 Mil.
Depreciation, Depletion and Amortization(DDA) was $29,099 Mil.
Selling, General & Admin. Expense(SGA) was $380 Mil.
Total Current Liabilities was $1,570 Mil.
Long-Term Debt was $8,719 Mil.
Net Income was -244 + -489 + -7213 + -5655 = $-13,601 Mil.
Non Operating Income was 102 + -54 + 58 + 62 = $168 Mil.
Cash Flow from Operations was 707 + 276 + 262 + 940 = $2,185 Mil.
|Accounts Receivable was $1,589 Mil.
Revenue was 2246 + 1630 + 2683 + 3441 = $10,000 Mil.
Gross Profit was 1730 + 1093 + 2071 + 2786 = $7,680 Mil.
Total Current Assets was $5,493 Mil.
Total Assets was $35,312 Mil.
Property, Plant and Equipment(Net PPE) was $28,315 Mil.
Depreciation, Depletion and Amortization(DDA) was $8,882 Mil.
Selling, General & Admin. Expense(SGA) was $423 Mil.
Total Current Liabilities was $2,383 Mil.
Long-Term Debt was $9,676 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)|
|=||(1016 / 5193)||/||(1589 / 10000)|
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)|
|=||(7680 / 10000)||/||(3340 / 5193)|
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 - (3292 + 20143) / 24346)||/||(1 - (5493 + 28315) / 35312)|
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))|
|=||(8882 / (8882 + 28315))||/||(29099 / (29099 + 20143))|
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)|
|=||(380 / 5193)||/||(423 / 10000)|
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)|
|=||((8719 + 1570) / 24346)||/||((9676 + 2383) / 35312)|
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|
|=||(-13601 - 168||-||2185)||/||24346|
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 -5.98 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