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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 -9.43. And the median was -2.78.
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 * 1.3368||+||0.528 * 1.1571||+||0.404 * 0.3677||+||0.892 * 0.5975||+||0.115 * 0.3997|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.6318||+||4.679 * -0.8766||-||0.327 * 1.1361|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $1,064 Mil.|
Revenue was 1438 + 1382 + 1052 + 959 = $4,831 Mil.
Gross Profit was 1005 + 971 + 622 + 455 = $3,053 Mil.
Total Current Assets was $3,272 Mil.
Total Assets was $23,149 Mil.
Property, Plant and Equipment(Net PPE) was $19,462 Mil.
Depreciation, Depletion and Amortization(DDA) was $28,875 Mil.
Selling, General & Admin. Expense(SGA) was $391 Mil.
Total Current Liabilities was $1,628 Mil.
Long-Term Debt was $8,721 Mil.
Net Income was -607 + -244 + -489 + -16782 = $-18,122 Mil.
Non Operating Income was 100 + 102 + -54 + -103 = $45 Mil.
Cash Flow from Operations was 651 + 707 + 276 + 491 = $2,125 Mil.
|Accounts Receivable was $1,332 Mil.
Revenue was 1526 + 2246 + 1630 + 2683 = $8,085 Mil.
Gross Profit was 1018 + 1730 + 1093 + 2071 = $5,912 Mil.
Total Current Assets was $4,079 Mil.
Total Assets was $27,812 Mil.
Property, Plant and Equipment(Net PPE) was $22,377 Mil.
Depreciation, Depletion and Amortization(DDA) was $7,019 Mil.
Selling, General & Admin. Expense(SGA) was $401 Mil.
Total Current Liabilities was $2,167 Mil.
Long-Term Debt was $8,777 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)|
|=||(1064 / 4831)||/||(1332 / 8085)|
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)|
|=||(5912 / 8085)||/||(3053 / 4831)|
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 - (3272 + 19462) / 23149)||/||(1 - (4079 + 22377) / 27812)|
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))|
|=||(7019 / (7019 + 22377))||/||(28875 / (28875 + 19462))|
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)|
|=||(391 / 4831)||/||(401 / 8085)|
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)|
|=||((8721 + 1628) / 23149)||/||((8777 + 2167) / 27812)|
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|
|=||(-18122 - 45||-||2125)||/||23149|
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 -7.03 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