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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 -0.26. The lowest was -4.04. And the median was -2.62.
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 * 0.9564||+||0.528 * 1.0404||+||0.404 * 1.1144||+||0.892 * 0.7875||+||0.115 * 0.8969|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9634||+||4.679 * -0.0895||-||0.327 * 1.0987|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $3,249 Mil.|
Revenue was 7254 + 6516 + 5575 + 5015 = $24,360 Mil.
Gross Profit was 2964 + 2171 + 2128 + 1436 = $8,699 Mil.
Total Current Assets was $8,609 Mil.
Total Assets was $89,772 Mil.
Property, Plant and Equipment(Net PPE) was $58,331 Mil.
Depreciation, Depletion and Amortization(DDA) was $9,062 Mil.
Selling, General & Admin. Expense(SGA) was $723 Mil.
Total Current Liabilities was $6,909 Mil.
Long-Term Debt was $26,186 Mil.
Net Income was -35 + -1040 + -1071 + -1469 = $-3,615 Mil.
Non Operating Income was 352 + -136 + -45 + -152 = $19 Mil.
Cash Flow from Operations was 1443 + 1280 + 1259 + 421 = $4,403 Mil.
|Accounts Receivable was $4,314 Mil.
Revenue was 6766 + 7507 + 8660 + 8002 = $30,935 Mil.
Gross Profit was 2494 + 2404 + 3632 + 2963 = $11,493 Mil.
Total Current Assets was $8,789 Mil.
Total Assets was $97,484 Mil.
Property, Plant and Equipment(Net PPE) was $66,446 Mil.
Depreciation, Depletion and Amortization(DDA) was $9,113 Mil.
Selling, General & Admin. Expense(SGA) was $953 Mil.
Total Current Liabilities was $9,256 Mil.
Long-Term Debt was $23,453 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)|
|=||(3249 / 24360)||/||(4314 / 30935)|
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)|
|=||(11493 / 30935)||/||(8699 / 24360)|
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 - (8609 + 58331) / 89772)||/||(1 - (8789 + 66446) / 97484)|
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))|
|=||(9113 / (9113 + 66446))||/||(9062 / (9062 + 58331))|
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)|
|=||(723 / 24360)||/||(953 / 30935)|
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)|
|=||((26186 + 6909) / 89772)||/||((23453 + 9256) / 97484)|
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|
|=||(-3615 - 19||-||4403)||/||89772|
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 -3.10 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