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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 * 0.7811||+||0.528 * 1.1002||+||0.404 * 1.0644||+||0.892 * 0.7959||+||0.115 * 0.891|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0271||+||4.679 * -0.0667||-||0.327 * 0.9498|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $5,246 Mil.|
Revenue was 8002 + 11851 + 12917 + 14701 = $47,471 Mil.
Gross Profit was 2963 + 4134 + 6173 + 7176 = $20,446 Mil.
Total Current Assets was $10,840 Mil.
Total Assets was $110,042 Mil.
Property, Plant and Equipment(Net PPE) was $74,220 Mil.
Depreciation, Depletion and Amortization(DDA) was $8,568 Mil.
Selling, General & Admin. Expense(SGA) was $712 Mil.
Total Current Liabilities was $9,563 Mil.
Long-Term Debt was $22,318 Mil.
Net Income was 272 + -39 + 2704 + 2081 = $5,018 Mil.
Non Operating Income was 0 + 83 + 8 + -7 = $84 Mil.
Cash Flow from Operations was 1870 + 2597 + 4180 + 3622 = $12,269 Mil.
|Accounts Receivable was $8,438 Mil.
Revenue was 16048 + 13985 + 15470 + 14142 = $59,645 Mil.
Gross Profit was 7026 + 6488 + 7800 + 6949 = $28,263 Mil.
Total Current Assets was $20,400 Mil.
Total Assets was $120,025 Mil.
Property, Plant and Equipment(Net PPE) was $74,025 Mil.
Depreciation, Depletion and Amortization(DDA) was $7,519 Mil.
Selling, General & Admin. Expense(SGA) was $871 Mil.
Total Current Liabilities was $17,117 Mil.
Long-Term Debt was $19,494 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)|
|=||(5246 / 47471)||/||(8438 / 59645)|
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)|
|=||(4134 / 59645)||/||(2963 / 47471)|
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 - (10840 + 74220) / 110042)||/||(1 - (20400 + 74025) / 120025)|
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))|
|=||(7519 / (7519 + 74025))||/||(8568 / (8568 + 74220))|
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)|
|=||(712 / 47471)||/||(871 / 59645)|
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)|
|=||((22318 + 9563) / 110042)||/||((19494 + 17117) / 120025)|
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|
|=||(5018 - 84||-||12269)||/||110042|
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