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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 * 1.2395||+||0.528 * 1.0153||+||0.404 * 1.0213||+||0.892 * 0.6596||+||0.115 * 0.843|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.5114||+||4.679 * -0.0644||-||0.327 * 1.0631|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $12,459 Mil.|
Revenue was 23553 + 29247 + 34315 + 40357 = $127,472 Mil.
Gross Profit was 6924 + 8707 + 11276 + 13739 = $40,646 Mil.
Total Current Assets was $31,713 Mil.
Total Assets was $263,842 Mil.
Property, Plant and Equipment(Net PPE) was $189,940 Mil.
Depreciation, Depletion and Amortization(DDA) was $21,029 Mil.
Selling, General & Admin. Expense(SGA) was $4,497 Mil.
Total Current Liabilities was $29,162 Mil.
Long-Term Debt was $32,709 Mil.
Net Income was -725 + -588 + 2037 + 571 = $1,295 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 1141 + 4557 + 5360 + 7220 = $18,278 Mil.
|Accounts Receivable was $15,239 Mil.
Revenue was 34558 + 46088 + 54679 + 57938 = $193,263 Mil.
Gross Profit was 11970 + 15253 + 17535 + 17807 = $62,565 Mil.
Total Current Assets was $41,270 Mil.
Total Assets was $269,604 Mil.
Property, Plant and Equipment(Net PPE) was $186,123 Mil.
Depreciation, Depletion and Amortization(DDA) was $17,074 Mil.
Selling, General & Admin. Expense(SGA) was $4,511 Mil.
Total Current Liabilities was $29,445 Mil.
Long-Term Debt was $30,025 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)|
|=||(12459 / 127472)||/||(15239 / 193263)|
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)|
|=||(62565 / 193263)||/||(40646 / 127472)|
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 - (31713 + 189940) / 263842)||/||(1 - (41270 + 186123) / 269604)|
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))|
|=||(17074 / (17074 + 186123))||/||(21029 / (21029 + 189940))|
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)|
|=||(4497 / 127472)||/||(4511 / 193263)|
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)|
|=||((32709 + 29162) / 263842)||/||((30025 + 29445) / 269604)|
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|
|=||(1295 - 0||-||18278)||/||263842|
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 -2.97 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