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GuruFocus has detected 5 Warning Signs with ConocoPhillips $COP.
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ConocoPhillips (NYSE:COP)
Beneish M-Score
-3.10 (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.

ConocoPhillips has a M-score of -3.10 suggests that the company is not a manipulator.

COP' s Beneish M-Score Range Over the Past 10 Years
Min: -4.04   Max: -0.26
Current: -3.1

-4.04
-0.26

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.


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 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
=-3.10

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

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

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)
=(3249 / 24360) / (4314 / 30935)
=0.13337438 / 0.13945369
=0.9564

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)
=(11493 / 30935) / (8699 / 24360)
=0.37152093 / 0.35710181
=1.0404

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 - (8609 + 58331) / 89772) / (1 - (8789 + 66446) / 97484)
=0.2543332 / 0.22823233
=1.1144

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
=24360 / 30935
=0.7875

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))
=0.12060774 / 0.134465
=0.8969

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)
=0.0296798 / 0.03080653
=0.9634

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)
=0.36865615 / 0.33553198
=1.0987

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
=(-3615 - 19 - 4403) / 89772
=-0.0895

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.


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.

ConocoPhillips Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.12380.57951.77980.80033.60410.57570.98630.84651.15990.9564
GMI 1.01171.16331.05810.98030.59010.90181.03791.05521.18831.0404
AQI 1.1090.741.0670.87961.01310.87221.00431.00611.02191.1144
SGI 1.03171.26570.6191.30360.33260.93850.93940.95310.55720.7875
DEPI 0.91360.87971.01170.96891.31830.84190.96210.93160.82440.8969
SGAI 0.97020.85040.8290.84051.29721.36240.82190.9032.32690.9634
LVGI 0.8831.28890.97280.96281.0121.00620.940.94921.15281.0987
TATA -0.0719-0.2763-0.0615-0.044-0.0469-0.0465-0.0536-0.0838-0.1239-0.0895
M-score -2.59-4.02-2.29-2.62-1.13-3.33-2.73-3.00-3.50-3.10

ConocoPhillips Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.95690.84650.8010.91730.93031.15991.18511.01161.10170.9564
GMI 1.12231.04451.05221.10981.21941.18831.20781.19871.05771.0404
AQI 1.041.00611.06441.01811.01941.02191.01041.04971.05651.1144
SGI 0.95090.95310.79590.68820.62480.55720.58870.60010.66270.7875
DEPI 0.98270.93160.8910.87910.85250.82440.84360.83810.84310.8969
SGAI 1.08620.9031.02711.15471.51012.32692.33792.17421.57850.9634
LVGI 0.90460.94920.94981.01811.10181.15281.25161.20681.1881.0987
TATA -0.0638-0.0836-0.0668-0.0713-0.0931-0.1239-0.1204-0.1272-0.1204-0.0895
M-score -2.77-3.00-3.10-3.15-3.33-3.50-3.46-3.58-3.38-3.10
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