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Chesapeake Energy Corp (NYSE:CHK)
Beneish M-Score
-4.31 (As of Today)

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.

Chesapeake Energy Corp has a M-score of -4.31 suggests that the company is not a manipulator.

CHK' s 10-Year Beneish M-Score Range
Min: -18.99   Max: 1.67
Current: -4.31

-18.99
1.67

During the past 13 years, the highest Beneish M-Score of Chesapeake Energy Corp was 1.67. The lowest was -18.99. And the median was -2.61.


Definition

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 Chesapeake Energy 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 * 0.6494+0.528 * 3.2898+0.404 * 0.9051+0.892 * 0.9757+0.115 * 0.7631
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 11.6123+4.679 * -0.1679-0.327 * 1.0649
=-4.31

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $1,643 Mil.
Revenue was 2760 + 5050 + 5703 + 5152 = $18,665 Mil.
Gross Profit was 2433 + -7573 + 5343 + 1420 = $1,623 Mil.
Total Current Assets was $5,398 Mil.
Total Assets was $34,373 Mil.
Property, Plant and Equipment(Net PPE) was $28,385 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,928 Mil.
Selling, General & Admin. Expense(SGA) was $-4,147 Mil.
Total Current Liabilities was $5,366 Mil.
Long-Term Debt was $10,623 Mil.
Net Income was -3739 + 640 + 662 + 191 = $-2,246 Mil.
Non Operating Income was -1 + 0 + -28 + -212 = $-241 Mil.
Cash Flow from Operations was 423 + 829 + 1162 + 1352 = $3,766 Mil.
Accounts Receivable was $2,593 Mil.
Revenue was 5046 + 4541 + 4867 + 4675 = $19,129 Mil.
Gross Profit was 4488 + -5451 + 4312 + 2123 = $5,472 Mil.
Total Current Assets was $4,275 Mil.
Total Assets was $42,605 Mil.
Property, Plant and Equipment(Net PPE) was $37,522 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,883 Mil.
Selling, General & Admin. Expense(SGA) was $-366 Mil.
Total Current Liabilities was $5,958 Mil.
Long-Term Debt was $12,653 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(1643 / 18665) / (2593 / 19129)
=0.08802572 / 0.13555335
=0.6494

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(-7573 / 19129) / (2433 / 18665)
=0.28605782 / 0.08695419
=3.2898

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (5398 + 28385) / 34373) / (1 - (4275 + 37522) / 42605)
=0.01716464 / 0.01896491
=0.9051

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=18665 / 19129
=0.9757

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))
=(2883 / (2883 + 37522)) / (2928 / (2928 + 28385))
=0.07135256 / 0.09350749
=0.7631

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)
=(-4147 / 18665) / (-366 / 19129)
=-0.22218055 / -0.01913325
=11.6123

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)
=((10623 + 5366) / 34373) / ((12653 + 5958) / 42605)
=0.46516161 / 0.43682666
=1.0649

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(-2246 - -241 - 3766) / 34373
=-0.1679

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.

Chesapeake Energy Corp has a M-score of -4.31 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Chesapeake Energy Corp Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.08450.68021.19380.82691.5111.22511.02150.78180.68210.8356
GMI 1.00730.89491.0960.73681.61821.07931.18141.04891.21161.0354
AQI 1.15021.71530.58520.790.98481.62941.09890.79240.66040.7938
SGI 1.72191.57041.06471.49090.66231.2161.24231.05851.42141.1968
DEPI 1.23430.98430.95531.08861.06071.20080.95510.7070.96970.8813
SGAI 0.89471.3831.64210.71520.13571.06740.97380.92230.6010.5887
LVGI 0.9440.82061.17560.97551.15090.91990.91871.05910.98240.9482
TATA -0.0862-0.1211-0.1162-0.1181-0.3328-0.0926-0.0995-0.1058-0.0835-0.0621
M-score -2.03-2.61-3.08-4.63-3.44-2.18-2.55-3.22-2.74-2.74

Chesapeake Energy Corp Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 0.78170.8570.97520.74240.68210.75810.7120.80970.83560.6494
GMI 1.5611.34311.15190.75613.341.43841.63131.91470.69893.2898
AQI 0.79240.75941.19520.86950.66040.55560.63490.65580.79380.9051
SGI 1.05861.07071.16741.43451.42151.4361.34221.23861.19670.9757
DEPI 0.7070.69780.70880.84790.96971.00510.99670.99020.88130.7631
SGAI 0.17430.24750.67944.1826-4.359-0.5007-0.6187-0.01920.716911.6123
LVGI 1.05911.04531.03070.89540.98240.96480.94430.97450.94821.0649
TATA -0.1112-0.1171-0.1154-0.0732-0.0836-0.0839-0.0942-0.0784-0.062-0.1679
M-score -2.85-2.93-2.72-3.38-0.77-2.38-2.40-2.28-2.94-4.31
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