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Devon Energy Corp (NYSE:DVN)
Beneish M-Score
-4.30 (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 -4.30 suggests that the company is not a manipulator.

DVN' s Beneish M-Score Range Over the Past 10 Years
Min: -7.94   Max: 6.59
Current: -4.3

-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 -2.62.


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 * 0.7017+0.528 * 1.8993+0.404 * 1.1108+0.892 * 1.0036+0.115 * 0.6276
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * -0.1983+4.679 * -0.451-0.327 * 1.3651
=-4.30

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $1,100 Mil.
Revenue was 3601 + 3393 + 3265 + 5995 = $16,254 Mil.
Gross Profit was 3091 + 2831 + 1273 + -1388 = $5,807 Mil.
Total Current Assets was $4,298 Mil.
Total Assets was $34,351 Mil.
Property, Plant and Equipment(Net PPE) was $22,775 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,398 Mil.
Selling, General & Admin. Expense(SGA) was $-679 Mil.
Total Current Liabilities was $3,501 Mil.
Long-Term Debt was $11,400 Mil.
Net Income was -3507 + -2816 + -3599 + -408 = $-10,330 Mil.
Non Operating Income was -51 + 4 + -15 + -39 = $-101 Mil.
Cash Flow from Operations was 1553 + 1101 + 1648 + 963 = $5,265 Mil.
Accounts Receivable was $1,562 Mil.
Revenue was 5336 + 4510 + 3725 + 2624 = $16,195 Mil.
Gross Profit was 4752 + 3928 + 1822 + 487 = $10,989 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 $3,411 Mil.
Total Current Liabilities was $5,994 Mil.
Long-Term Debt was $10,161 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)
=(1100 / 16254) / (1562 / 16195)
=0.06767565 / 0.09644952
=0.7017

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)
=(2831 / 16195) / (3091 / 16254)
=0.67854276 / 0.3572659
=1.8993

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 - (4298 + 22775) / 34351) / (1 - (5973 + 35169) / 50839)
=0.21187156 / 0.19073939
=1.1108

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
=16254 / 16195
=1.0036

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))
=(3120 / (3120 + 35169)) / (3398 / (3398 + 22775))
=0.08148554 / 0.12982845
=0.6276

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)
=(-679 / 16254) / (3411 / 16195)
=-0.04177433 / 0.21062056
=-0.1983

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)
=((11400 + 3501) / 34351) / ((10161 + 5994) / 50839)
=0.4337865 / 0.31776786
=1.3651

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
=(-10330 - -101 - 5265) / 34351
=-0.451

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 -4.30 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

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

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 1.79431.21020.74281.09240.81220.68070.74190.52150.65850.7017
GMI 1.04020.9171.08871.09171.0771.04951.28291.27631.48211.8993
AQI 1.04381.0050.92231.19611.12991.1861.03360.91161.04241.1108
SGI 0.85291.08911.09431.35391.42811.56431.88191.57241.32541.0036
DEPI 0.90340.99591.04811.38721.27831.1171.06260.69680.66550.6276
SGAI 1.84871.93280.33540.34521.31151.5324-0.9582-0.8439-0.207-0.1983
LVGI 1.0380.97351.02121.03181.01121.0190.91360.95541.16861.3651
TATA -0.1637-0.1653-0.1266-0.0787-0.0923-0.0802-0.083-0.1846-0.2713-0.451
M-score -2.78-3.17-3.10-2.17-2.63-2.63-1.78-2.87-3.39-4.30
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