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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 Denbury Resources Inc was 1.14. The lowest was -9.49. And the median was -2.71.
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 Denbury Resources Inc 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 * 1.0259||+||0.528 * 1.2981||+||0.404 * 0.2311||+||0.892 * 0.5667||+||0.115 * 0.8775|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2936||+||4.679 * 0.1694||-||0.327 * 1.8748|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $120 Mil.|
Revenue was 255.148 + 194.844 + 269.617 + 303.6 = $1,023 Mil.
Gross Profit was 141.059 + 78.596 + 100.543 + 148.616 = $469 Mil.
Total Current Assets was $213 Mil.
Total Assets was $4,990 Mil.
Property, Plant and Equipment(Net PPE) was $4,615 Mil.
Depreciation, Depletion and Amortization(DDA) was $378 Mil.
Selling, General & Admin. Expense(SGA) was $130 Mil.
Total Current Liabilities was $437 Mil.
Long-Term Debt was $2,998 Mil.
Net Income was -380.668 + -185.193 + -885.077 + -2244.126 = $-3,695 Mil.
Non Operating Income was -601.877 + -186.148 + -1318.76 + -2934.152 = $-5,041 Mil.
Cash Flow from Operations was 60.915 + 2.029 + 164.907 + 272.676 = $501 Mil.
|Accounts Receivable was $207 Mil.
Revenue was 376.694 + 307.649 + 483.684 + 637.657 = $1,806 Mil.
Gross Profit was 229.364 + 153.933 + 274.903 + 415.731 = $1,074 Mil.
Total Current Assets was $558 Mil.
Total Assets was $10,495 Mil.
Property, Plant and Equipment(Net PPE) was $8,462 Mil.
Depreciation, Depletion and Amortization(DDA) was $602 Mil.
Selling, General & Admin. Expense(SGA) was $178 Mil.
Total Current Liabilities was $383 Mil.
Long-Term Debt was $3,471 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)|
|=||(120.473 / 1023.209)||/||(207.233 / 1805.684)|
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)|
|=||(1073.931 / 1805.684)||/||(468.814 / 1023.209)|
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 - (212.819 + 4615.047) / 4989.973)||/||(1 - (558.382 + 8461.793) / 10495.303)|
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))|
|=||(601.576 / (601.576 + 8461.793))||/||(377.669 / (377.669 + 4615.047))|
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)|
|=||(130.371 / 1023.209)||/||(177.856 / 1805.684)|
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)|
|=||((2998.268 + 436.914) / 4989.973)||/||((3471.141 + 382.641) / 10495.303)|
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|
|=||(-3695.064 - -5040.937||-||500.527)||/||4989.973|
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.
Denbury Resources Inc has a M-score of -2.55 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
Denbury Resources Inc Annual Data
Denbury Resources Inc Quarterly Data