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Devon Energy Corp (NYSE:DVN)
Beneish M-Score
-2.12 (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 -2.12 signals that the company is a manipulator.

DVN' s 10-Year Beneish M-Score Range
Min: -4.61   Max: 4.53
Current: -2.12

-4.61
4.53

During the past 13 years, the highest Beneish M-Score of Devon Energy Corp was 4.53. The lowest was -4.61. And the median was -2.67.


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 * 0.7419+0.528 * 1.1878+0.404 * 1.0336+0.892 * 1.8819+0.115 * 1.0626
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.7295+4.679 * -0.083-0.327 * 0.9136
=-2.12

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $1,413 Mil.
Revenue was 5995 + 5336 + 4510 + 3725 = $19,566 Mil.
Gross Profit was 3704 + 2971 + 1922 + 1822 = $10,419 Mil.
Total Current Assets was $6,498 Mil.
Total Assets was $50,637 Mil.
Property, Plant and Equipment(Net PPE) was $36,296 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,319 Mil.
Selling, General & Admin. Expense(SGA) was $847 Mil.
Total Current Liabilities was $5,935 Mil.
Long-Term Debt was $9,830 Mil.
Net Income was -408 + 1016 + 675 + 324 = $1,607 Mil.
Non Operating Income was -39 + -10 + -100 + -24 = $-173 Mil.
Cash Flow from Operations was 963 + 1559 + 2049 + 1410 = $5,981 Mil.
Accounts Receivable was $1,012 Mil.
Revenue was 2624 + 2714 + 3088 + 1971 = $10,397 Mil.
Gross Profit was 1615 + 1731 + 2147 + 1083 = $6,576 Mil.
Total Current Assets was $8,005 Mil.
Total Assets was $42,877 Mil.
Property, Plant and Equipment(Net PPE) was $28,447 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,780 Mil.
Selling, General & Admin. Expense(SGA) was $617 Mil.
Total Current Liabilities was $6,655 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)
=(1413 / 19566) / (1012 / 10397)
=0.07221711 / 0.09733577
=0.7419

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)
=(2971 / 10397) / (3704 / 19566)
=0.63249014 / 0.53250537
=1.1878

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 - (6498 + 36296) / 50637) / (1 - (8005 + 28447) / 42877)
=0.15488674 / 0.14984724
=1.0336

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
=19566 / 10397
=1.8819

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))
=(2780 / (2780 + 28447)) / (3319 / (3319 + 36296))
=0.08902552 / 0.0837814
=1.0626

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)
=(847 / 19566) / (617 / 10397)
=0.04328938 / 0.05934404
=0.7295

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)
=((9830 + 5935) / 50637) / ((7956 + 6655) / 42877)
=0.31133361 / 0.34076545
=0.9136

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
=(1607 - -173 - 5981) / 50637
=-0.083

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 -2.12 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.07430.86851.1550.59911.60660.80230.99561.08840.74280.7419
GMI 0.96221.020.99510.97461.12960.95761.00721.05841.02861.1878
AQI 1.04271.04910.92050.98761.18450.8780.73010.94910.92231.0336
SGI 1.10360.97411.16331.21970.57841.24021.15230.82951.09431.8819
DEPI 1.1171.05080.95130.72781.2571.12921.07490.89161.04811.0626
SGAI 0.9521.40061.11081.03091.73710.70060.90171.42610.81480.7295
LVGI 0.93420.99180.87631.23341.03250.78511.21111.07981.02120.9136
TATA -0.0861-0.0827-0.0727-0.3622-0.2431-0.0251-0.0367-0.117-0.1266-0.083
M-score -2.68-3.04-2.55-4.48-3.40-2.50-2.67-3.20-3.21-2.12

Devon Energy Corp Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.9011.08841.58021.79431.21020.74281.09240.81220.68070.7419
GMI 1.05561.05841.10611.10741.02321.02861.03761.19171.24091.1878
AQI 0.90.94910.99971.04381.0050.92231.19611.12991.1861.0336
SGI 0.86390.82950.76030.85291.08911.09431.35391.42811.56431.8819
DEPI 0.92120.89160.86120.90340.99591.04811.38721.27831.1171.0626
SGAI 1.38011.42611.42291.17420.89370.81480.7430.73710.73060.7295
LVGI 1.06431.07981.16461.0380.97351.02121.03181.01121.0190.9136
TATA -0.0918-0.1162-0.162-0.1637-0.1653-0.1266-0.0787-0.0923-0.0802-0.083
M-score -3.23-3.20-3.00-2.63-2.94-3.21-2.27-2.48-2.39-2.12
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