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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.
Apache Corporation has a M-score of -2.98 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Apache Corporation was -1.55. The lowest was -3.81. And the median was -2.71.
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 Corporation 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 * 1.0176||+||0.528 * 1.0219||+||0.404 * 1.1256||+||0.892 * 0.94||+||0.115 * 1.0388|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0077||+||4.679 * -0.1233||-||0.327 * 0.8384|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $2,952 Mil.|
Revenue was 3576 + 4019 + 4383 + 4076 = $16,054 Mil.
Gross Profit was 2879 + 3117 + 3474 + 3231 = $12,701 Mil.
Total Current Assets was $6,366 Mil.
Total Assets was $61,637 Mil.
Property, Plant and Equipment(Net PPE) was $52,421 Mil.
Depreciation, Depletion and Amortization(DDA) was $6,700 Mil.
Selling, General & Admin. Expense(SGA) was $503 Mil.
Total Current Liabilities was $4,700 Mil.
Long-Term Debt was $9,672 Mil.
Net Income was 174 + 306 + 1035 + 717 = $2,232 Mil.
Non Operating Income was 0 + 0 + -2 + 0 = $-2 Mil.
Cash Flow from Operations was 2477 + 1978 + 2759 + 2621 = $9,835 Mil.
|Accounts Receivable was $3,086 Mil.
Revenue was 4391 + 4179 + 3972 + 4536 = $17,078 Mil.
Gross Profit was 3533 + 3292 + 3196 + 3786 = $13,807 Mil.
Total Current Assets was $4,962 Mil.
Total Assets was $60,737 Mil.
Property, Plant and Equipment(Net PPE) was $53,280 Mil.
Depreciation, Depletion and Amortization(DDA) was $7,109 Mil.
Selling, General & Admin. Expense(SGA) was $531 Mil.
Total Current Liabilities was $5,536 Mil.
Long-Term Debt was $11,355 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)|
|=||(2952 / 16054)||/||(3086 / 17078)|
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)|
|=||(3117 / 17078)||/||(2879 / 16054)|
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 - (6366 + 52421) / 61637)||/||(1 - (4962 + 53280) / 60737)|
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))|
|=||(7109 / (7109 + 53280))||/||(6700 / (6700 + 52421))|
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)|
|=||(503 / 16054)||/||(531 / 17078)|
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)|
|=||((9672 + 4700) / 61637)||/||((11355 + 5536) / 60737)|
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|
|=||(2232 - -2||-||9835)||/||61637|
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 Corporation has a M-score of -2.98 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 Corporation Annual Data
Apache Corporation Quarterly Data