Switch to:
Chesapeake Energy Corp (NYSE:CHK)
Beneish M-Score
-2.74 (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 -2.74 suggests that the company is not a manipulator.

CHK' s 10-Year Beneish M-Score Range
Min: -9.65   Max: 1.67
Current: -2.74

-9.65
1.67

During the past 13 years, the highest Beneish M-Score of Chesapeake Energy Corp was 1.67. The lowest was -9.65. And the median was -2.80.


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 * 0.8282+0.528 * 1.0352+0.404 * 0.7938+0.892 * 1.1967+0.115 * 0.8813
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.5888+4.679 * -0.062-0.327 * 0.9466
=-2.74

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $2,010 Mil.
Revenue was 5050 + 5703 + 5152 + 5046 = $20,951 Mil.
Gross Profit was 1942 + 1974 + 1420 + 1508 = $6,844 Mil.
Total Current Assets was $7,468 Mil.
Total Assets was $40,751 Mil.
Property, Plant and Equipment(Net PPE) was $32,515 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,915 Mil.
Selling, General & Admin. Expense(SGA) was $322 Mil.
Total Current Liabilities was $5,863 Mil.
Long-Term Debt was $11,154 Mil.
Net Income was 640 + 662 + 191 + 425 = $1,918 Mil.
Non Operating Income was 0 + -28 + -212 + 52 = $-188 Mil.
Cash Flow from Operations was 829 + 1162 + 1352 + 1291 = $4,634 Mil.
Accounts Receivable was $2,028 Mil.
Revenue was 4541 + 4867 + 4675 + 3424 = $17,507 Mil.
Gross Profit was 1330 + 1303 + 2123 + 1164 = $5,920 Mil.
Total Current Assets was $3,656 Mil.
Total Assets was $41,782 Mil.
Property, Plant and Equipment(Net PPE) was $37,134 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,903 Mil.
Selling, General & Admin. Expense(SGA) was $457 Mil.
Total Current Liabilities was $5,515 Mil.
Long-Term Debt was $12,917 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)
=(2010 / 20951) / (2028 / 17507)
=0.09593814 / 0.11583938
=0.8282

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)
=(1974 / 17507) / (1942 / 20951)
=0.33815045 / 0.32666698
=1.0352

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 - (7468 + 32515) / 40751) / (1 - (3656 + 37134) / 41782)
=0.01884616 / 0.02374228
=0.7938

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
=20951 / 17507
=1.1967

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))
=(2903 / (2903 + 37134)) / (2915 / (2915 + 32515))
=0.07250793 / 0.08227491
=0.8813

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)
=(322 / 20951) / (457 / 17507)
=0.01536919 / 0.02610384
=0.5888

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)
=((11154 + 5863) / 40751) / ((12917 + 5515) / 41782)
=0.41758484 / 0.44114691
=0.9466

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
=(1918 - -188 - 4634) / 40751
=-0.062

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 -2.74 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 1.08450.68021.19380.82691.5111.22511.02150.84670.63550.8282
GMI 1.00730.89491.0960.73681.04491.67141.18141.04891.21161.0354
AQI 1.15021.71530.58520.790.98481.62941.1110.78380.66040.7938
SGI 1.72191.57041.06471.49090.66231.2161.24231.05851.42141.1968
DEPI 1.23430.98430.95531.08861.06071.20080.95460.70740.96970.8813
SGAI 0.89471.3831.64210.71521.03650.13980.97380.92230.6010.5887
LVGI 0.9440.82061.17560.97551.15090.91990.91871.0460.99640.9466
TATA -0.0862-0.1211-0.1162-0.1181-0.3328-0.0926-0.0995-0.1058-0.0835-0.0621
M-score -2.03-2.61-3.08-4.63-3.90-1.71-2.54-3.16-2.79-2.74

Chesapeake Energy Corp Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.79170.84660.8570.97520.74240.63550.75810.7120.80970.8282
GMI 0.33380.71261.08511.63151.71141.78361.51721.3991.1841.0352
AQI 0.84540.78380.75941.19520.86950.66040.55560.63490.65580.7938
SGI 1.05731.05861.07071.16741.43451.42151.4361.34221.23861.1967
DEPI 0.78570.70740.69780.70880.84790.96971.00510.99670.99020.8813
SGAI -1.42554.86590.85560.13680.10470.11370.18480.66550.65560.5888
LVGI 1.0851.0461.04531.03070.89540.99640.96480.94430.97450.9466
TATA -0.127-0.1058-0.121-0.1193-0.0756-0.0909-0.0863-0.0967-0.082-0.062
M-score -3.26-4.02-3.19-2.39-2.19-2.44-2.47-2.75-2.80-2.74
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK