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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 -3.50. 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 * 0.9303||+||0.528 * 1.278||+||0.404 * 1.0194||+||0.892 * 0.6248||+||0.115 * 0.8525|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.5101||+||4.679 * -0.0949||-||0.327 * 1.1018|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $4,332 Mil.|
Revenue was 7507 + 8660 + 8002 + 11851 = $36,020 Mil.
Gross Profit was 2404 + 3632 + 2963 + 4134 = $13,133 Mil.
Total Current Assets was $9,664 Mil.
Total Assets was $105,949 Mil.
Property, Plant and Equipment(Net PPE) was $71,828 Mil.
Depreciation, Depletion and Amortization(DDA) was $9,002 Mil.
Selling, General & Admin. Expense(SGA) was $802 Mil.
Total Current Liabilities was $8,287 Mil.
Long-Term Debt was $24,716 Mil.
Net Income was -1071 + -179 + 272 + -39 = $-1,017 Mil.
Non Operating Income was 72 + -70 + 0 + 83 = $85 Mil.
Cash Flow from Operations was 1934 + 2172 + 1870 + 2977 = $8,953 Mil.
|Accounts Receivable was $7,453 Mil.
Revenue was 12917 + 14701 + 16048 + 13985 = $57,651 Mil.
Gross Profit was 6173 + 7176 + 7026 + 6488 = $26,863 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.
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)|
|=||(4332 / 36020)||/||(7453 / 57651)|
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)|
|=||(3632 / 57651)||/||(2404 / 36020)|
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 - (9664 + 71828) / 105949)||/||(1 - (16253 + 75790) / 118986)|
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))|
|=||(7951 / (7951 + 75790))||/||(9002 / (9002 + 71828))|
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)|
|=||(802 / 36020)||/||(850 / 57651)|
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)|
|=||((24716 + 8287) / 105949)||/||((19499 + 14141) / 118986)|
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|
|=||(-1017 - 85||-||8953)||/||105949|
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 -3.31 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