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Devon Energy Corp (NYSE:DVN)
Beneish M-Score
-3.07 (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 -3.07 suggests that the company is not a manipulator.

DVN' s 10-Year Beneish M-Score Range
Min: -4.61   Max: 4.53
Current: -3.07

-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 -2.69.


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 * 1.1157+0.528 * 1.0286+0.404 * 0.9223+0.892 * 1.0943+0.115 * 1.0481
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8148+4.679 * -0.1708-0.327 * 1.0212
=-3.07

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $1,520 Mil.
Revenue was 2614 + 2720 + 3091 + 1972 = $10,397 Mil.
Gross Profit was 1605 + 1737 + 2150 + 1084 = $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.
Net Income was 207 + 429 + 683 + -1339 = $-20 Mil.
Non Operating Income was 1978 + -23 + -87 + 0 = $1,868 Mil.
Cash Flow from Operations was 1437 + 1601 + 1396 + 1002 = $5,436 Mil.
Accounts Receivable was $1,245 Mil.
Revenue was 2580 + 1865 + 2559 + 2497 = $9,501 Mil.
Gross Profit was 1647 + 1039 + 1837 + 1658 = $6,181 Mil.
Total Current Assets was $8,971 Mil.
Total Assets was $43,326 Mil.
Property, Plant and Equipment(Net PPE) was $27,316 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,811 Mil.
Selling, General & Admin. Expense(SGA) was $692 Mil.
Total Current Liabilities was $6,003 Mil.
Long-Term Debt was $8,455 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)
=(1520 / 10397) / (1245 / 9501)
=0.14619602 / 0.13103884
=1.1157

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)
=(1737 / 9501) / (1605 / 10397)
=0.6505631 / 0.63249014
=1.0286

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 - (8005 + 28447) / 42877) / (1 - (8971 + 27316) / 43326)
=0.14984724 / 0.16246596
=0.9223

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
=10397 / 9501
=1.0943

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))
=(2811 / (2811 + 27316)) / (2780 / (2780 + 28447))
=0.09330501 / 0.08902552
=1.0481

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)
=(617 / 10397) / (692 / 9501)
=0.05934404 / 0.07283444
=0.8148

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)
=((7956 + 6655) / 42877) / ((8455 + 6003) / 43326)
=0.34076545 / 0.33370263
=1.0212

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
=(-20 - 1868 - 5436) / 42877
=-0.1708

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 -3.07 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 1.11611.07430.86851.17450.58921.60660.80231.02091.06151.1157
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 -0.0868-0.0861-0.0827-0.0727-0.3622-0.2431-0.0282-0.037-0.117-0.126
M-score -2.31-2.68-3.04-2.53-4.49-3.40-2.51-2.65-3.22-2.86

Devon Energy Corp Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.29571.02090.65530.5380.9011.06151.62631.79351.25271.1157
GMI 1.02391.00720.9590.98281.05561.05841.1061.10711.02261.0286
AQI 0.73450.73010.71780.86350.90.94910.99971.04381.0050.9223
SGI 1.07361.15231.33121.13070.86390.82950.76040.85331.09021.0943
DEPI 1.14661.07491.01180.9580.92120.89160.86120.90340.99591.0481
SGAI 0.91850.90170.84321.04871.38011.42611.42271.17370.89290.8148
LVGI 1.15961.21111.10181.13791.06431.07981.16461.0380.97351.0212
TATA -0.0175-0.037-0.0307-0.0781-0.092-0.1162-0.1621-0.1618-0.1627-0.1708
M-score -2.34-2.65-2.79-3.28-3.23-3.22-2.96-2.62-2.89-3.07
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