Switch to:
Chesapeake Energy Corp (NYSE:CHK)
Beneish M-Score
-5.27 (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 -5.27 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: -5.27

-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 * 1.4287+0.528 * -0.7752+0.404 * 0.9203+0.892 * 0.4902+0.115 * 1.3348
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * -3.9081+4.679 * -0.5353-0.327 * 1.4093
=-5.27

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $893 Mil.
Revenue was 2276 + 1622 + 1953 + 2649 = $8,500 Mil.
Gross Profit was 1622 + -267 + 305 + -5403 = $-3,743 Mil.
Total Current Assets was $1,067 Mil.
Total Assets was $12,523 Mil.
Property, Plant and Equipment(Net PPE) was $11,051 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,230 Mil.
Selling, General & Admin. Expense(SGA) was $-4,257 Mil.
Total Current Liabilities was $3,606 Mil.
Long-Term Debt was $9,022 Mil.
Net Income was -1155 + -1750 + -921 + -2185 = $-6,011 Mil.
Non Operating Income was 85 + 69 + 93 + 217 = $464 Mil.
Cash Flow from Operations was 376 + 95 + -421 + 179 = $229 Mil.
Accounts Receivable was $1,275 Mil.
Revenue was 3376 + 3521 + 3218 + 7224 = $17,339 Mil.
Gross Profit was 2617 + 627 + 733 + 1942 = $5,919 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 $2,222 Mil.
Total Current Liabilities was $4,557 Mil.
Long-Term Debt was $10,674 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)
=(893 / 8500) / (1275 / 17339)
=0.10505882 / 0.07353365
=1.4287

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)
=(5919 / 17339) / (-3743 / 8500)
=0.34136917 / -0.44035294
=-0.7752

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 - (1067 + 11051) / 12523) / (1 - (3579 + 16959) / 21286)
=0.03234049 / 0.03514047
=0.9203

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
=8500 / 17339
=0.4902

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))
=(2617 / (2617 + 16959)) / (1230 / (1230 + 11051))
=0.1336841 / 0.10015471
=1.3348

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)
=(-4257 / 8500) / (2222 / 17339)
=-0.50082353 / 0.12815041
=-3.9081

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)
=((9022 + 3606) / 12523) / ((10674 + 4557) / 21286)
=1.00838457 / 0.71554073
=1.4093

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
=(-6011 - 464 - 229) / 12523
=-0.5353

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 -5.27 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 local exchange's currency.

Chesapeake Energy Corp Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.78131.19380.82691.5111.22511.02150.78180.62590.55011.5265
GMI 0.86171.10590.70561.61821.07931.18141.04891.32051.04851.5939
AQI 1.71480.58520.790.98481.62941.09890.79240.66040.79381.6426
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 0.82061.17560.97551.15090.91990.91871.05910.98240.93661.9596
TATA -0.1211-0.116-0.1181-0.3328-0.0926-0.0995-0.1058-0.0835-0.0621-0.9274
M-score -2.63-2.99-4.65-3.44-2.18-2.55-3.22-2.61-2.97-6.58

Chesapeake Energy Corp Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 0.65910.75180.55010.6160.69980.66161.52651.05621.29931.4287
GMI 1.51131.27511.04831.06170.97870.8292-2.6491-1.7675-0.9372-0.7752
AQI 0.63490.65580.79380.90511.44971.93191.64262.17761.68620.9203
SGI 1.451.3341.21191.02870.92850.78760.5520.53990.48820.4902
DEPI 0.99670.99020.88130.76310.6980.54760.610.78010.95641.3348
SGAI 0.61470.60320.58140.68230.73028.061-20.036-22.1072-26.3584-3.9081
LVGI 0.94430.97450.93661.06491.30891.68621.95961.80511.66561.4093
TATA -0.0947-0.0786-0.0621-0.1679-0.322-0.6422-0.928-0.8139-0.7421-0.5353
M-score -2.63-2.70-2.97-3.59-4.25-7.19-5.14-3.95-2.40-5.27
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