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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 Chevron Corp was -0.42. The lowest was -6.14. And the median was -2.55.
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 Chevron Corp 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 * 1.2605||+||0.528 * 1.0602||+||0.404 * 1.1166||+||0.892 * 0.6625||+||0.115 * 0.9711|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.3303||+||4.679 * -0.0616||-||0.327 * 1.1416|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $13,490 Mil.|
Revenue was 29282 + 23553 + 29247 + 34315 = $116,397 Mil.
Gross Profit was 12220 + 6924 + 8707 + 11276 = $39,127 Mil.
Total Current Assets was $32,471 Mil.
Total Assets was $261,478 Mil.
Property, Plant and Equipment(Net PPE) was $184,685 Mil.
Depreciation, Depletion and Amortization(DDA) was $20,792 Mil.
Selling, General & Admin. Expense(SGA) was $9,414 Mil.
Total Current Liabilities was $24,927 Mil.
Long-Term Debt was $39,555 Mil.
Net Income was -1470 + -725 + -588 + 2037 = $-746 Mil.
Non Operating Income was 1784 + 0 + 0 + 0 = $1,784 Mil.
Cash Flow from Operations was 2531 + 1141 + 4557 + 5360 = $13,589 Mil.
|Accounts Receivable was $16,153 Mil.
Revenue was 40357 + 34558 + 46088 + 54679 = $175,682 Mil.
Gross Profit was 17851 + 11970 + 15253 + 17535 = $62,609 Mil.
Total Current Assets was $40,738 Mil.
Total Assets was $266,455 Mil.
Property, Plant and Equipment(Net PPE) was $185,267 Mil.
Depreciation, Depletion and Amortization(DDA) was $20,190 Mil.
Selling, General & Admin. Expense(SGA) was $10,681 Mil.
Total Current Liabilities was $28,268 Mil.
Long-Term Debt was $29,289 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)|
|=||(13490 / 116397)||/||(16153 / 175682)|
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)|
|=||(62609 / 175682)||/||(39127 / 116397)|
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 - (32471 + 184685) / 261478)||/||(1 - (40738 + 185267) / 266455)|
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))|
|=||(20190 / (20190 + 185267))||/||(20792 / (20792 + 184685))|
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)|
|=||(9414 / 116397)||/||(10681 / 175682)|
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)|
|=||((39555 + 24927) / 261478)||/||((29289 + 28268) / 266455)|
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|
|=||(-746 - 1784||-||13589)||/||261478|
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.
Chevron Corp 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
Chevron Corp Annual Data
Chevron Corp Quarterly Data