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GuruFocus has detected 2 Warning Signs with Apache Corp $APA.
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Apache Corp (NYSE:APA)
Beneish M-Score
-3.68 (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.

Apache Corp has a M-score of -3.68 suggests that the company is not a manipulator.

APA' s Beneish M-Score Range Over the Past 10 Years
Min: -5.93   Max: -1.65
Current: -3.68

-5.93
-1.65

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.


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 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
=-3.68

* 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

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)
=(1128 / 5323) / (1253 / 6884)
=0.21191058 / 0.18201627
=1.1642

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)
=(4819 / 6884) / (3629 / 5323)
=0.70002905 / 0.68175841
=1.0268

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 - (3241 + 18867) / 22519) / (1 - (3752 + 20838) / 25500)
=0.01825125 / 0.03568627
=0.5114

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
=5323 / 6884
=0.7732

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))
=0.1367139 / 0.12185246
=1.122

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)
=0.07702423 / 0.05490994
=1.4027

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)
=0.46125494 / 0.414
=1.1141

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
=(-1522 - 250 - 2430) / 22519
=-0.1866

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.


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.

Apache Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.95050.56331.63850.98341.03311.02191.09740.86291.03091.1583
GMI 1.00120.98451.05410.96730.98671.01731.02211.01971.11551.0244
AQI 1.17141.17130.93161.66590.83711.18791.12560.56471.36670.5114
SGI 1.23381.24370.69531.40361.39660.98080.87160.79460.60050.7772
DEPI 0.92120.34491.3312.480.88310.74031.13651.16970.62941.122
SGAI 1.05490.84421.71310.7870.86491.1441.07151.18531.39691.3883
LVGI 0.97191.0771.03741.0270.84351.23220.83841.14281.55371.1141
TATA -0.1014-0.2265-0.1683-0.0847-0.1061-0.1072-0.1272-0.2989-0.5286-0.1884
M-score -2.73-3.74-3.05-2.08-2.60-3.02-2.98-4.41-5.36-3.69

Apache Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.9310.84181.03951.00411.09731.05750.97641.01881.0081.1642
GMI 0.9861.01821.06911.09841.19851.11751.08751.11061.01561.0268
AQI 1.26240.56470.65450.72880.84261.36671.66310.87850.36770.5114
SGI 0.7960.81440.68570.65750.53080.58540.64920.62760.79250.7732
DEPI 0.94581.16970.44770.84521.42840.6294-0.53980.88210.5991.122
SGAI 1.15351.1461.32221.41131.69111.44131.40331.42841.23371.4027
LVGI 0.9761.14281.35831.46661.5781.55371.87161.23751.13611.1141
TATA -0.1606-0.2986-0.4077-0.5679-0.7817-0.6503-0.6836-0.4531-0.3205-0.1866
M-score -3.40-4.41-4.97-5.74-6.68-5.93-6.23-5.07-4.54-3.68
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