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Devon Energy Corp (NYSE:DVN)
Beneish M-Score
-2.66 (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 -2.66 suggests that the company is not a manipulator.

DVN' s 10-Year Beneish M-Score Range
Min: -7.94   Max: 6.59
Current: -2.66

-7.94
6.59

During the past 13 years, the highest Beneish M-Score of Devon Energy Corp was 6.59. The lowest was -7.94. And the median was -2.57.


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 * 0.8125+0.528 * 1.192+0.404 * 1.1299+0.892 * 1.4277+0.115 * 1.2783
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.7373+4.679 * -0.1312-0.327 * 1.0112
=-2.66

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $1,784 Mil.
Revenue was 4510 + 3725 + 2614 + 2720 = $13,569 Mil.
Gross Profit was 1922 + 1822 + 1605 + 1737 = $7,086 Mil.
Total Current Assets was $4,392 Mil.
Total Assets was $51,115 Mil.
Property, Plant and Equipment(Net PPE) was $36,999 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,969 Mil.
Selling, General & Admin. Expense(SGA) was $700 Mil.
Total Current Liabilities was $4,679 Mil.
Long-Term Debt was $11,880 Mil.
Net Income was 675 + 324 + 207 + 429 = $1,635 Mil.
Non Operating Income was -89 + -24 + 1978 + -23 = $1,842 Mil.
Cash Flow from Operations was 2049 + 1410 + 1437 + 1601 = $6,497 Mil.
Accounts Receivable was $1,538 Mil.
Revenue was 3088 + 1971 + 2580 + 1865 = $9,504 Mil.
Gross Profit was 2147 + 1083 + 1647 + 1039 = $5,916 Mil.
Total Current Assets was $6,357 Mil.
Total Assets was $40,020 Mil.
Property, Plant and Equipment(Net PPE) was $26,925 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,825 Mil.
Selling, General & Admin. Expense(SGA) was $665 Mil.
Total Current Liabilities was $4,865 Mil.
Long-Term Debt was $7,956 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)
=(1784 / 13569) / (1538 / 9504)
=0.13147616 / 0.1618266
=0.8125

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)
=(1822 / 9504) / (1922 / 13569)
=0.62247475 / 0.52221977
=1.192

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 - (4392 + 36999) / 51115) / (1 - (6357 + 26925) / 40020)
=0.1902377 / 0.16836582
=1.1299

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
=13569 / 9504
=1.4277

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))
=(2825 / (2825 + 26925)) / (2969 / (2969 + 36999))
=0.09495798 / 0.07428443
=1.2783

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)
=(700 / 13569) / (665 / 9504)
=0.05158818 / 0.06997054
=0.7373

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)
=((11880 + 4679) / 51115) / ((7956 + 4865) / 40020)
=0.32395579 / 0.32036482
=1.0112

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
=(1635 - 1842 - 6497) / 51115
=-0.1312

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 -2.66 suggests that the company will not 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.12911.07430.86851.1550.59911.60660.80230.99561.08841.1157
GMI 1.19510.96221.020.99510.97461.12960.95761.00721.05841.0286
AQI 0.95261.04271.04910.92050.98761.18450.8780.73010.94910.9223
SGI 1.23591.10360.97411.16331.21970.57841.24021.15230.82951.0943
DEPI 0.86371.1171.05080.95130.72781.2571.12921.07490.89161.0481
SGAI 0.15130.9521.40061.11081.03091.73710.70060.90171.42610.8148
LVGI 0.85610.93420.99180.87631.23341.03250.78511.21111.07981.0212
TATA -0.0868-0.0861-0.0827-0.0727-0.3622-0.2431-0.0251-0.0367-0.117-0.126
M-score -2.30-2.68-3.04-2.55-4.48-3.40-2.50-2.67-3.20-2.86

Devon Energy Corp Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.65530.61470.9011.08841.58021.79431.20951.11611.09270.8125
GMI 0.9590.98281.05561.05841.10611.10741.02281.02881.03781.192
AQI 0.71780.86350.90.94910.99971.04381.0050.92231.19611.1299
SGI 1.33121.13070.86390.82950.76030.85291.08971.09391.35341.4277
DEPI 1.01180.9580.92120.89160.86120.90340.99591.04811.38721.2783
SGAI 0.84321.04871.38011.42611.42291.17420.89320.81510.74330.7373
LVGI 1.10181.13791.06431.07981.16461.0380.97351.02121.03181.0112
TATA -0.0305-0.0779-0.0918-0.1162-0.162-0.1638-0.1647-0.1727-0.1162-0.1312
M-score -2.79-3.20-3.23-3.20-3.00-2.63-2.94-3.08-2.45-2.66
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