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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 Corporation was -0.60. The lowest was -4.42. And the median was -2.72.
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 * 0.8243||+||0.528 * 0.9906||+||0.404 * 1.2624||+||0.892 * 0.8991||+||0.115 * 0.8469|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.033||+||4.679 * -0.1545||-||0.327 * 0.976|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $2,287 Mil.|
Revenue was 3740 + 3484 + 3675 + 3940 = $14,839 Mil.
Gross Profit was 3021 + 2805 + 3008 + 3093 = $11,927 Mil.
Total Current Assets was $4,426 Mil.
Total Assets was $60,990 Mil.
Property, Plant and Equipment(Net PPE) was $53,035 Mil.
Depreciation, Depletion and Amortization(DDA) was $7,541 Mil.
Selling, General & Admin. Expense(SGA) was $469 Mil.
Total Current Liabilities was $4,307 Mil.
Long-Term Debt was $10,902 Mil.
Net Income was -1330 + 505 + 236 + 174 = $-415 Mil.
Non Operating Income was -2 + -1 + -2 + 6 = $1 Mil.
Cash Flow from Operations was 1896 + 2339 + 2293 + 2477 = $9,005 Mil.
|Accounts Receivable was $3,086 Mil.
Revenue was 3900 + 4268 + 3946 + 4391 = $16,505 Mil.
Gross Profit was 3047 + 3410 + 3151 + 3533 = $13,141 Mil.
Total Current Assets was $6,016 Mil.
Total Assets was $60,239 Mil.
Property, Plant and Equipment(Net PPE) was $51,462 Mil.
Depreciation, Depletion and Amortization(DDA) was $6,065 Mil.
Selling, General & Admin. Expense(SGA) was $505 Mil.
Total Current Liabilities was $4,523 Mil.
Long-Term Debt was $10,868 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)|
|=||(2287 / 14839)||/||(3086 / 16505)|
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)|
|=||(2805 / 16505)||/||(3021 / 14839)|
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 - (4426 + 53035) / 60990)||/||(1 - (6016 + 51462) / 60239)|
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))|
|=||(6065 / (6065 + 51462))||/||(7541 / (7541 + 53035))|
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)|
|=||(469 / 14839)||/||(505 / 16505)|
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)|
|=||((10902 + 4307) / 60990)||/||((10868 + 4523) / 60239)|
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|
|=||(-415 - 1||-||9005)||/||60990|
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 -3.37 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