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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.
During the past 13 years, the highest Beneish M-Score of ConocoPhillips was -0.77. The lowest was -3.49. And the median was -2.68.
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 ConocoPhillips 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 * 0.8465||+||0.528 * 1.1057||+||0.404 * 1.0061||+||0.892 * 0.9531||+||0.115 * 0.9316|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.903||+||4.679 * -0.0852||-||0.327 * 0.9492|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $6,675 Mil.|
Revenue was 11851 + 12917 + 14701 + 16048 = $55,517 Mil.
Gross Profit was 4134 + 6173 + 7176 + 6730 = $24,213 Mil.
Total Current Assets was $15,068 Mil.
Total Assets was $116,539 Mil.
Property, Plant and Equipment(Net PPE) was $75,444 Mil.
Depreciation, Depletion and Amortization(DDA) was $8,329 Mil.
Selling, General & Admin. Expense(SGA) was $735 Mil.
Total Current Liabilities was $11,537 Mil.
Long-Term Debt was $22,383 Mil.
Net Income was -39 + 2704 + 2081 + 2123 = $6,869 Mil.
Non Operating Income was 83 + 8 + -7 + -18 = $66 Mil.
Cash Flow from Operations was 2597 + 4180 + 3622 + 6336 = $16,735 Mil.
|Accounts Receivable was $8,273 Mil.
Revenue was 13985 + 15470 + 14142 + 14651 = $58,248 Mil.
Gross Profit was 6488 + 7800 + 6949 + 6853 = $28,090 Mil.
Total Current Assets was $19,023 Mil.
Total Assets was $118,057 Mil.
Property, Plant and Equipment(Net PPE) was $72,827 Mil.
Depreciation, Depletion and Amortization(DDA) was $7,434 Mil.
Selling, General & Admin. Expense(SGA) was $854 Mil.
Total Current Liabilities was $15,129 Mil.
Long-Term Debt was $21,073 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(6675 / 55517)||/||(8273 / 58248)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(6173 / 58248)||/||(4134 / 55517)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (15068 + 75444) / 116539)||/||(1 - (19023 + 72827) / 118057)|
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.
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))|
|=||(7434 / (7434 + 72827))||/||(8329 / (8329 + 75444))|
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)|
|=||(735 / 55517)||/||(854 / 58248)|
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)|
|=||((22383 + 11537) / 116539)||/||((21073 + 15129) / 118057)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(6869 - 66||-||16735)||/||116539|
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.
ConocoPhillips has a M-score of -2.98 suggests that the company will not be a manipulator.
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
ConocoPhillips Annual Data
ConocoPhillips Quarterly Data