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Chesapeake Energy Corp (NYSE:CHK)
Beneish M-Score
-5.22 (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 -5.22 suggests that the company is not a manipulator.

CHK' s Beneish M-Score Range Over the Past 10 Years
Min: -18.99   Max: 27.92
Current: -5.22

-18.99
27.92

During the past 13 years, the highest Beneish M-Score of Chesapeake Energy Corp was 27.92. The lowest was -18.99. And the median was -2.55.


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 * 1.1827+0.528 * 2.6997+0.404 * 1.9456+0.892 * 0.5363+0.115 * 0.9497
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.469+4.679 * -0.7421-0.327 * 1.6656
=-5.22

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $952 Mil.
Revenue was 1622 + 1953 + 4078 + 2893 = $10,546 Mil.
Gross Profit was -267 + 305 + 348 + 662 = $1,048 Mil.
Total Current Assets was $1,204 Mil.
Total Assets was $13,487 Mil.
Property, Plant and Equipment(Net PPE) was $11,593 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,469 Mil.
Selling, General & Admin. Expense(SGA) was $219 Mil.
Total Current Liabilities was $3,777 Mil.
Long-Term Debt was $8,621 Mil.
Net Income was -1750 + -921 + -2185 + -4652 = $-9,508 Mil.
Non Operating Income was 69 + 93 + 217 + -49 = $330 Mil.
Cash Flow from Operations was 95 + -421 + 179 + 318 = $171 Mil.
Accounts Receivable was $1,501 Mil.
Revenue was 3521 + 3218 + 7224 + 5703 = $19,666 Mil.
Gross Profit was 627 + 733 + 1942 + 1974 = $5,276 Mil.
Total Current Assets was $4,231 Mil.
Total Assets was $28,598 Mil.
Property, Plant and Equipment(Net PPE) was $23,615 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,824 Mil.
Selling, General & Admin. Expense(SGA) was $278 Mil.
Total Current Liabilities was $5,128 Mil.
Long-Term Debt was $10,655 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)
=(952 / 10546) / (1501 / 19666)
=0.09027119 / 0.07632462
=1.1827

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)
=(5276 / 19666) / (1048 / 10546)
=0.26828028 / 0.09937417
=2.6997

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 - (1204 + 11593) / 13487) / (1 - (4231 + 23615) / 28598)
=0.05116038 / 0.02629555
=1.9456

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
=10546 / 19666
=0.5363

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))
=(2824 / (2824 + 23615)) / (1469 / (1469 + 11593))
=0.10681191 / 0.11246363
=0.9497

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)
=(219 / 10546) / (278 / 19666)
=0.02076617 / 0.01413607
=1.469

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)
=((8621 + 3777) / 13487) / ((10655 + 5128) / 28598)
=0.91925558 / 0.55189174
=1.6656

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
=(-9508 - 330 - 171) / 13487
=-0.7421

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 -5.22 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.78131.19380.82691.5111.22511.02150.78180.62590.55010.941
GMI 0.86171.10590.70561.61821.07931.18141.04891.32051.04851.5939
AQI 1.71480.58520.790.98481.62941.09890.79240.66040.79381.77
SGI 1.57041.06471.49090.66231.2161.24231.05851.54921.2120.552
DEPI 0.98290.95411.07531.06071.20080.95510.7070.96970.88130.61
SGAI 1.93021.176510.71520.13571.06740.97380.92230.55140.58131.3222
LVGI 0.82061.17560.97551.15090.91990.91871.05910.98240.93661.9608
TATA -0.1211-0.116-0.1181-0.3328-0.0926-0.0995-0.1058-0.0835-0.0621-0.9251
M-score -2.63-2.99-4.65-3.44-2.18-2.55-3.22-2.61-2.97-7.05

Chesapeake Energy Corp Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.70040.65910.75180.55010.6160.69980.68060.87610.97591.1827
GMI 1.35991.51131.27511.04831.06170.97871.20371.71211.82622.6997
AQI 0.55560.63490.65580.79380.90511.44971.93191.772.17761.9456
SGI 1.55421.451.3341.21191.02870.92850.76560.59290.58440.5363
DEPI 1.00510.99670.99020.88130.76310.6980.54760.610.78010.9497
SGAI 0.53850.61470.60320.58140.68230.73020.99641.2311.29921.469
LVGI 0.96480.94430.97450.93661.06491.30891.68621.96081.80511.6656
TATA -0.0839-0.0947-0.0786-0.0621-0.1679-0.322-0.6422-0.9257-0.8139-0.7421
M-score -2.55-2.63-2.70-2.97-3.59-4.25-5.78-7.00-6.11-5.22
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