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Devon Energy Corp (NYSE:DVN)
Beneish M-Score
-2.39 (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 -2.39 suggests that the company is not a manipulator.

DVN' s 10-Year Beneish M-Score Range
Min: -7.94   Max: 6.59
Current: -2.39

-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 -2.53.


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 * 0.6807+0.528 * 1.2409+0.404 * 1.186+0.892 * 1.5643+0.115 * 1.117
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.7306+4.679 * -0.0797-0.327 * 1.019
=-2.39

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $1,562 Mil.
Revenue was 5336 + 4510 + 3725 + 2624 = $16,195 Mil.
Gross Profit was 2971 + 1922 + 1822 + 1615 = $8,330 Mil.
Total Current Assets was $5,973 Mil.
Total Assets was $50,839 Mil.
Property, Plant and Equipment(Net PPE) was $35,169 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,120 Mil.
Selling, General & Admin. Expense(SGA) was $752 Mil.
Total Current Liabilities was $5,994 Mil.
Long-Term Debt was $10,161 Mil.
Net Income was 1016 + 675 + 324 + 207 = $2,222 Mil.
Non Operating Income was -10 + -100 + -24 + -49 = $-183 Mil.
Cash Flow from Operations was 1559 + 2049 + 1410 + 1437 = $6,455 Mil.
Accounts Receivable was $1,467 Mil.
Revenue was 2714 + 3088 + 1971 + 2580 = $10,353 Mil.
Gross Profit was 1731 + 2147 + 1083 + 1647 = $6,608 Mil.
Total Current Assets was $6,315 Mil.
Total Assets was $40,846 Mil.
Property, Plant and Equipment(Net PPE) was $27,962 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,800 Mil.
Selling, General & Admin. Expense(SGA) was $658 Mil.
Total Current Liabilities was $4,782 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)
=(1562 / 16195) / (1467 / 10353)
=0.09644952 / 0.14169806
=0.6807

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)
=(1922 / 10353) / (2971 / 16195)
=0.6382691 / 0.51435628
=1.2409

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 - (5973 + 35169) / 50839) / (1 - (6315 + 27962) / 40846)
=0.19073939 / 0.16082358
=1.186

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
=16195 / 10353
=1.5643

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))
=(2800 / (2800 + 27962)) / (3120 / (3120 + 35169))
=0.09102139 / 0.08148554
=1.117

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)
=(752 / 16195) / (658 / 10353)
=0.04643408 / 0.06355646
=0.7306

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)
=((10161 + 5994) / 50839) / ((7956 + 4782) / 40846)
=0.31776786 / 0.31185428
=1.019

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
=(2222 - -183 - 6455) / 50839
=-0.0797

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 -2.39 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

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.61470.9011.08841.58021.79431.21021.11571.09240.81220.6807
GMI 0.98281.05561.05841.10611.10741.02321.02861.03761.19171.2409
AQI 0.86350.90.94910.99971.04381.0050.92231.19611.12991.186
SGI 1.13070.86390.82950.76030.85291.08911.09431.35391.42811.5643
DEPI 0.9580.92120.89160.86120.90340.99591.04811.38721.27831.117
SGAI 1.04871.38011.42611.42291.17420.89370.81480.7430.73710.7306
LVGI 1.13791.06431.07981.16461.0380.97351.02121.03181.01121.019
TATA -0.0779-0.0918-0.1162-0.162-0.1637-0.1653-0.126-0.0782-0.0918-0.0797
M-score -3.20-3.23-3.20-3.00-2.63-2.94-2.86-2.27-2.47-2.39
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