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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 -6.11. 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 * 0.9008||+||0.528 * 1.059||+||0.404 * 0.7288||+||0.892 * 0.7328||+||0.115 * 0.2328|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2694||+||4.679 * -0.6276||-||0.327 * 1.4666|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $1,589 Mil.|
Revenue was 1977 + 1818 + 2952 + 3740 = $10,487 Mil.
Gross Profit was 1461 + 1224 + 2265 + 3021 = $7,971 Mil.
Total Current Assets was $5,493 Mil.
Total Assets was $35,312 Mil.
Property, Plant and Equipment(Net PPE) was $28,315 Mil.
Depreciation, Depletion and Amortization(DDA) was $22,824 Mil.
Selling, General & Admin. Expense(SGA) was $427 Mil.
Total Current Liabilities was $2,383 Mil.
Long-Term Debt was $9,676 Mil.
Net Income was -5600 + -4651 + -4814 + -1330 = $-16,395 Mil.
Non Operating Income was -2 + -2 + 11 + -2 = $5 Mil.
Cash Flow from Operations was 1283 + 650 + 1933 + 1896 = $5,762 Mil.
|Accounts Receivable was $2,407 Mil.
Revenue was 3289 + 3675 + 3446 + 3900 = $14,310 Mil.
Gross Profit was 2663 + 3008 + 2800 + 3047 = $11,518 Mil.
Total Current Assets was $5,126 Mil.
Total Assets was $61,171 Mil.
Property, Plant and Equipment(Net PPE) was $52,470 Mil.
Depreciation, Depletion and Amortization(DDA) was $6,085 Mil.
Selling, General & Admin. Expense(SGA) was $459 Mil.
Total Current Liabilities was $4,570 Mil.
Long-Term Debt was $9,674 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)|
|=||(1589 / 10487)||/||(2407 / 14310)|
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)|
|=||(1224 / 14310)||/||(1461 / 10487)|
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 - (5493 + 28315) / 35312)||/||(1 - (5126 + 52470) / 61171)|
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))|
|=||(6085 / (6085 + 52470))||/||(22824 / (22824 + 28315))|
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)|
|=||(427 / 10487)||/||(459 / 14310)|
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)|
|=||((9676 + 2383) / 35312)||/||((9674 + 4570) / 61171)|
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|
|=||(-16395 - 5||-||5762)||/||35312|
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 -6.11 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