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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 -3.46. And the median was -2.65.
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 * 0.9315||+||0.528 * 1.0791||+||0.404 * 1.04||+||0.892 * 0.9509||+||0.115 * 0.9827|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0862||+||4.679 * -0.0728||-||0.327 * 0.9046|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $7,255 Mil.|
Revenue was 12917 + 14701 + 16048 + 13985 = $57,651 Mil.
Gross Profit was 6173 + 7176 + 6730 + 5256 = $25,335 Mil.
Total Current Assets was $16,253 Mil.
Total Assets was $118,986 Mil.
Property, Plant and Equipment(Net PPE) was $75,790 Mil.
Depreciation, Depletion and Amortization(DDA) was $7,951 Mil.
Selling, General & Admin. Expense(SGA) was $850 Mil.
Total Current Liabilities was $14,141 Mil.
Long-Term Debt was $19,499 Mil.
Net Income was 2704 + 2081 + 2123 + 2487 = $9,395 Mil.
Non Operating Income was 8 + -7 + -18 + 24 = $7 Mil.
Cash Flow from Operations was 4180 + 3622 + 6336 + 3911 = $18,049 Mil.
|Accounts Receivable was $8,191 Mil.
Revenue was 15470 + 14142 + 14651 + 16366 = $60,629 Mil.
Gross Profit was 7800 + 6949 + 6853 + 7150 = $28,752 Mil.
Total Current Assets was $22,557 Mil.
Total Assets was $119,760 Mil.
Property, Plant and Equipment(Net PPE) was $71,129 Mil.
Depreciation, Depletion and Amortization(DDA) was $7,320 Mil.
Selling, General & Admin. Expense(SGA) was $823 Mil.
Total Current Liabilities was $16,335 Mil.
Long-Term Debt was $21,096 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)|
|=||(7255 / 57651)||/||(8191 / 60629)|
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)|
|=||(7176 / 60629)||/||(6173 / 57651)|
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 - (16253 + 75790) / 118986)||/||(1 - (22557 + 71129) / 119760)|
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))|
|=||(7320 / (7320 + 71129))||/||(7951 / (7951 + 75790))|
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)|
|=||(850 / 57651)||/||(823 / 60629)|
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)|
|=||((19499 + 14141) / 118986)||/||((21096 + 16335) / 119760)|
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|
|=||(9395 - 7||-||18049)||/||118986|
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 -2.86 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