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Chesapeake Energy Corp (NYSE:CHK)
Beneish M-Score
-5.87 (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 -5.87 suggests that the company is not a manipulator.

CHK' s Beneish M-Score Range Over the Past 10 Years
Min: -18.99   Max: 1.67
Current: -5.87

-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 -2.62.


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 * 0.7754+0.528 * 1.0612+0.404 * 1.9319+0.892 * 0.6719+0.115 * 0.5476
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1353+4.679 * -0.6419-0.327 * 1.6862
=-5.87

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $1,275 Mil.
Revenue was 2893 + 3033 + 2760 + 5050 = $13,736 Mil.
Gross Profit was 687 + 661 + 761 + 1989 = $4,098 Mil.
Total Current Assets was $3,579 Mil.
Total Assets was $21,286 Mil.
Property, Plant and Equipment(Net PPE) was $16,959 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,617 Mil.
Selling, General & Admin. Expense(SGA) was $267 Mil.
Total Current Liabilities was $4,557 Mil.
Long-Term Debt was $10,674 Mil.
Net Income was -4652 + -4108 + -3739 + 640 = $-11,859 Mil.
Non Operating Income was -49 + -29 + -1 + 0 = $-79 Mil.
Cash Flow from Operations was 318 + 314 + 423 + 829 = $1,884 Mil.
Accounts Receivable was $2,447 Mil.
Revenue was 5703 + 5152 + 5046 + 4541 = $20,442 Mil.
Gross Profit was 2036 + 1492 + 1558 + 1386 = $6,472 Mil.
Total Current Assets was $3,129 Mil.
Total Assets was $40,518 Mil.
Property, Plant and Equipment(Net PPE) was $36,652 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,895 Mil.
Selling, General & Admin. Expense(SGA) was $350 Mil.
Total Current Liabilities was $5,602 Mil.
Long-Term Debt was $11,592 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)
=(1275 / 13736) / (2447 / 20442)
=0.09282178 / 0.11970453
=0.7754

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)
=(661 / 20442) / (687 / 13736)
=0.31660307 / 0.29834013
=1.0612

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 - (3579 + 16959) / 21286) / (1 - (3129 + 36652) / 40518)
=0.03514047 / 0.01818945
=1.9319

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
=13736 / 20442
=0.6719

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))
=(2895 / (2895 + 36652)) / (2617 / (2617 + 16959))
=0.07320404 / 0.1336841
=0.5476

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)
=(267 / 13736) / (350 / 20442)
=0.01943797 / 0.01712161
=1.1353

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)
=((10674 + 4557) / 21286) / ((11592 + 5602) / 40518)
=0.71554073 / 0.42435461
=1.6862

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
=(-11859 - -79 - 1884) / 21286
=-0.6419

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 -5.87 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 1.00730.89491.0960.73681.57821.07131.17531.051.20991.0402
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 -2.03-2.61-3.08-4.63-3.46-2.18-2.55-3.22-2.74-2.73

Chesapeake Energy Corp Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 0.97520.74240.63550.75810.7120.80970.82820.64940.770.7754
GMI 1.57671.65421.71961.48891.39011.18231.04031.00880.89881.0612
AQI 1.19520.86950.66040.55560.63490.65580.79380.90511.44971.9319
SGI 1.16741.43451.42151.4361.34221.23861.19670.97570.84390.6719
DEPI 0.70880.84790.96971.00510.99670.99020.88130.76310.6980.5476
SGAI 0.13680.10470.11370.18480.66550.65560.58880.71930.80341.1353
LVGI 1.03070.89540.99640.96480.94430.97450.94661.06491.30891.6862
TATA -0.1193-0.0756-0.0909-0.0863-0.0967-0.082-0.062-0.1679-0.3222-0.6419
M-score -2.42-2.22-2.47-2.49-2.76-2.80-2.74-3.64-4.31-5.87
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