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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 -1.65. The lowest was -9.29. And the median was -2.74.
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 * 1.2363||+||0.528 * 1.1895||+||0.404 * 1.9736||+||0.892 * 0.5008||+||0.115 * 0.249|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.6746||+||4.679 * -1.3915||-||0.327 * 2.1149|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $1,253 Mil.|
Revenue was 1263 + 1496 + 1977 + 1818 = $6,554 Mil.
Gross Profit was 759 + 988 + 1461 + 1224 = $4,432 Mil.
Total Current Assets was $3,752 Mil.
Total Assets was $18,842 Mil.
Property, Plant and Equipment(Net PPE) was $14,119 Mil.
Depreciation, Depletion and Amortization(DDA) was $29,372 Mil.
Selling, General & Admin. Expense(SGA) was $374 Mil.
Total Current Liabilities was $1,841 Mil.
Long-Term Debt was $8,777 Mil.
Net Income was -7213 + -5655 + -5600 + -4651 = $-23,119 Mil.
Non Operating Income was 58 + 62 + -2 + -2 = $116 Mil.
Cash Flow from Operations was 262 + 789 + 1283 + 650 = $2,984 Mil.
|Accounts Receivable was $2,024 Mil.
Revenue was 2683 + 3441 + 3289 + 3675 = $13,088 Mil.
Gross Profit was 2071 + 2786 + 2663 + 3008 = $10,528 Mil.
Total Current Assets was $6,415 Mil.
Total Assets was $55,952 Mil.
Property, Plant and Equipment(Net PPE) was $48,076 Mil.
Depreciation, Depletion and Amortization(DDA) was $9,720 Mil.
Selling, General & Admin. Expense(SGA) was $446 Mil.
Total Current Liabilities was $3,664 Mil.
Long-Term Debt was $11,245 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)|
|=||(1253 / 6554)||/||(2024 / 13088)|
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)|
|=||(988 / 13088)||/||(759 / 6554)|
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 - (3752 + 14119) / 18842)||/||(1 - (6415 + 48076) / 55952)|
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))|
|=||(9720 / (9720 + 48076))||/||(29372 / (29372 + 14119))|
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)|
|=||(374 / 6554)||/||(446 / 13088)|
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)|
|=||((8777 + 1841) / 18842)||/||((11245 + 3664) / 55952)|
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|
|=||(-23119 - 116||-||2984)||/||18842|
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 -9.29 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