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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 -9.28. And the median was -2.76.
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 * 1.2093||+||0.528 * 1.1787||+||0.404 * 1.6631||+||0.892 * 0.5241||+||0.115 * 0.4668|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.7418||+||4.679 * -1.2271||-||0.327 * 1.8716|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $1,120 Mil.|
Revenue was 1052 + 1263 + 1496 + 1977 = $5,788 Mil.
Gross Profit was 622 + 759 + 988 + 1461 = $3,830 Mil.
Total Current Assets was $3,222 Mil.
Total Assets was $17,679 Mil.
Property, Plant and Equipment(Net PPE) was $13,542 Mil.
Depreciation, Depletion and Amortization(DDA) was $22,152 Mil.
Selling, General & Admin. Expense(SGA) was $388 Mil.
Total Current Liabilities was $1,598 Mil.
Long-Term Debt was $8,718 Mil.
Net Income was -489 + -7213 + -5655 + -5600 = $-18,957 Mil.
Non Operating Income was -54 + 58 + 62 + 61 = $127 Mil.
Cash Flow from Operations was 276 + 262 + 789 + 1283 = $2,610 Mil.
|Accounts Receivable was $1,767 Mil.
Revenue was 1630 + 2683 + 3441 + 3289 = $11,043 Mil.
Gross Profit was 1093 + 2071 + 2786 + 2663 = $8,613 Mil.
Total Current Assets was $5,906 Mil.
Total Assets was $48,650 Mil.
Property, Plant and Equipment(Net PPE) was $41,230 Mil.
Depreciation, Depletion and Amortization(DDA) was $16,816 Mil.
Selling, General & Admin. Expense(SGA) was $425 Mil.
Total Current Liabilities was $5,493 Mil.
Long-Term Debt was $9,675 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)|
|=||(1120 / 5788)||/||(1767 / 11043)|
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)|
|=||(8613 / 11043)||/||(3830 / 5788)|
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 - (3222 + 13542) / 17679)||/||(1 - (5906 + 41230) / 48650)|
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))|
|=||(16816 / (16816 + 41230))||/||(22152 / (22152 + 13542))|
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)|
|=||(388 / 5788)||/||(425 / 11043)|
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)|
|=||((8718 + 1598) / 17679)||/||((9675 + 5493) / 48650)|
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|
|=||(-18957 - 127||-||2610)||/||17679|
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 -8.57 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