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Chesapeake Energy Corp (NYSE:CHK)
Beneish M-Score
-5.92 (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 -5.92 suggests that the company is not a manipulator.

CHK' s 10-Year Beneish M-Score Range
Min: -21.04   Max: 1.67
Current: -5.92

-21.04
1.67

During the past 13 years, the highest Beneish M-Score of Chesapeake Energy Corp was 1.67. The lowest was -21.04. And the median was -2.58.


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 * 0.77+0.528 * -1.7354+0.404 * 1.4497+0.892 * 0.8439+0.115 * 0.698
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 2.0682+4.679 * -0.3222-0.327 * 1.3089
=-5.92

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $1,501 Mil.
Revenue was 3033 + 2760 + 5050 + 5703 = $16,546 Mil.
Gross Profit was 627 + 733 + -7573 + 5343 = $-870 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 $-5,868 Mil.
Total Current Liabilities was $5,128 Mil.
Long-Term Debt was $10,655 Mil.
Net Income was -4108 + -3739 + 640 + 662 = $-6,545 Mil.
Non Operating Income was -29 + -1 + 0 + -28 = $-58 Mil.
Cash Flow from Operations was 314 + 423 + 829 + 1162 = $2,728 Mil.
Accounts Receivable was $2,310 Mil.
Revenue was 5152 + 5046 + 4541 + 4867 = $19,606 Mil.
Gross Profit was 1420 + 1508 + -5451 + 4312 = $1,789 Mil.
Total Current Assets was $4,370 Mil.
Total Assets was $41,127 Mil.
Property, Plant and Equipment(Net PPE) was $36,011 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,901 Mil.
Selling, General & Admin. Expense(SGA) was $-3,362 Mil.
Total Current Liabilities was $5,792 Mil.
Long-Term Debt was $11,549 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)
=(1501 / 16546) / (2310 / 19606)
=0.09071679 / 0.11782108
=0.77

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)
=(733 / 19606) / (627 / 16546)
=0.09124758 / -0.05258068
=-1.7354

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 - (4231 + 23615) / 28598) / (1 - (4370 + 36011) / 41127)
=0.02629555 / 0.01813894
=1.4497

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
=16546 / 19606
=0.8439

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))
=(2901 / (2901 + 36011)) / (2824 / (2824 + 23615))
=0.07455284 / 0.10681191
=0.698

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)
=(-5868 / 16546) / (-3362 / 19606)
=-0.35464765 / -0.17147812
=2.0682

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)
=((10655 + 5128) / 28598) / ((11549 + 5792) / 41127)
=0.55189174 / 0.42164515
=1.3089

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
=(-6545 - -58 - 2728) / 28598
=-0.3222

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 -5.92 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

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 0.8570.97520.74240.68210.75810.7120.80970.83560.64940.77
GMI 1.34311.15190.75613.343.15844.34863.93813.6827-31.5786-1.7354
AQI 0.75941.19520.86950.66040.55560.63490.65580.79380.90511.4497
SGI 1.07071.16741.43451.42151.4361.34221.23861.19670.97570.8439
DEPI 0.69780.70880.84790.96971.00510.99670.99020.88130.76310.698
SGAI 0.24750.67944.1826-4.359-4.5778-5.4452-0.71781.46811.79092.0682
LVGI 1.04531.03070.89540.98240.96480.94430.97450.94821.06491.3089
TATA -0.1171-0.1154-0.0732-0.0836-0.0839-0.0947-0.0789-0.0625-0.1684-0.3222
M-score -2.93-2.72-3.38-0.77-0.77-0.14-1.10-1.49-21.04-5.92
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