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Devon Energy Corp (NYSE:DVN)
Beneish M-Score
-1.76 (As of Today)

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.

Devon Energy Corp has a M-score of -1.76 signals that the company is a manipulator.

DVN' s Beneish M-Score Range Over the Past 10 Years
Min: -8.1   Max: 6.59
Current: -1.76

-8.1
6.59

During the past 13 years, the highest Beneish M-Score of Devon Energy Corp was 6.59. The lowest was -8.10. And the median was -2.61.


Definition

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 Devon Energy 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 * 1.2413+0.528 * 8.0814+0.404 * 1.1934+0.892 * 0.6171+0.115 * 0.8901
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.7339+4.679 * -0.5736-0.327 * 1.482
=-1.76

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $992 Mil.
Revenue was 2488 + 2126 + 2886 + 3601 = $11,101 Mil.
Gross Profit was 734 + 616 + -4013 + 3091 = $428 Mil.
Total Current Assets was $3,982 Mil.
Total Assets was $27,244 Mil.
Property, Plant and Equipment(Net PPE) was $16,815 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,411 Mil.
Selling, General & Admin. Expense(SGA) was $-2,569 Mil.
Total Current Liabilities was $2,929 Mil.
Long-Term Debt was $12,357 Mil.
Net Income was -1570 + -3056 + -4532 + -3507 = $-12,665 Mil.
Non Operating Income was -92 + -30 + 18 + -51 = $-155 Mil.
Cash Flow from Operations was 335 + 149 + 1081 + 1553 = $3,118 Mil.
Accounts Receivable was $1,295 Mil.
Revenue was 3393 + 3265 + 5995 + 5336 = $17,989 Mil.
Gross Profit was 968 + 1273 + -1388 + 4752 = $5,605 Mil.
Total Current Assets was $4,730 Mil.
Total Assets was $40,606 Mil.
Property, Plant and Equipment(Net PPE) was $27,824 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,496 Mil.
Selling, General & Admin. Expense(SGA) was $-2,401 Mil.
Total Current Liabilities was $3,998 Mil.
Long-Term Debt was $11,375 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(992 / 11101) / (1295 / 17989)
=0.08936132 / 0.07198844
=1.2413

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(5605 / 17989) / (428 / 11101)
=0.3115793 / 0.03855509
=8.0814

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (3982 + 16815) / 27244) / (1 - (4730 + 27824) / 40606)
=0.23663926 / 0.19829582
=1.1934

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=11101 / 17989
=0.6171

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))
=(3496 / (3496 + 27824)) / (2411 / (2411 + 16815))
=0.11162197 / 0.1254031
=0.8901

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)
=(-2569 / 11101) / (-2401 / 17989)
=-0.23142059 / -0.13347045
=1.7339

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)
=((12357 + 2929) / 27244) / ((11375 + 3998) / 40606)
=0.56107767 / 0.37858937
=1.482

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(-12665 - -155 - 3118) / 27244
=-0.5736

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.

Devon Energy Corp has a M-score of -1.76 signals that the company is likely to be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Devon Energy Corp Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.86851.1550.59911.60660.80230.99641.08760.75090.74230.9187
GMI 1.020.99510.97461.12960.95761.00761.05811.02861.18781.5148
AQI 1.04910.92050.98761.18450.8780.73010.94910.92231.03361.4075
SGI 0.97411.16331.21970.57841.24021.15140.83011.09431.88190.6718
DEPI 1.05080.95130.72781.2571.12921.07490.89161.04811.06260.5943
SGAI 1.40061.11081.03091.73710.70060.90241.42490.81480.72951.5025
LVGI 0.99180.87631.23341.03250.78511.21111.07981.02120.91361.6784
TATA -0.0851-0.0745-0.3708-0.0226-0.0251-0.0367-0.1183-0.1266-0.0827-0.6702
M-score -3.05-2.56-4.52-2.37-2.50-2.67-3.21-3.20-2.12-5.90

Devon Energy Corp Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 1.4480.81720.92340.74230.37810.54430.69680.91871.11911.2413
GMI 1.09171.0771.04951.28291.27631.97472.79644.64228.13018.0814
AQI 1.19611.12991.1861.03360.91161.04241.11081.40751.25851.1934
SGI 1.35391.42811.56431.88191.57241.32541.00360.67180.62840.6171
DEPI 1.38721.27831.1171.06260.69680.66550.62760.59430.80590.8901
SGAI 0.34521.31151.5324-0.9582-0.8439-0.9238-0.74257.95269.5331.7339
LVGI 1.03181.01121.0190.91360.95541.16861.36511.67841.47691.482
TATA -0.0787-0.0923-0.0802-0.0827-0.1843-0.271-0.4506-0.6702-0.6193-0.5736
M-score -1.85-2.63-2.41-1.78-3.00-3.11-3.73-5.36-3.38-1.76
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