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Devon Energy Corp (NYSE:DVN)
Beneish M-Score
-3.75 (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 -3.75 suggests that the company is not a manipulator.

DVN' s 10-Year Beneish M-Score Range
Min: -7.94   Max: 6.59
Current: -3.75

-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 -2.61.


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 * 0.6585+0.528 * 1.1184+0.404 * 1.0424+0.892 * 1.3254+0.115 * 0.6655
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.7732+4.679 * -0.2713-0.327 * 1.1686
=-3.75

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $1,557 Mil.
Revenue was 3393 + 3265 + 5995 + 5336 = $17,989 Mil.
Gross Profit was 2831 + 1273 + 3704 + 2971 = $10,779 Mil.
Total Current Assets was $4,730 Mil.
Total Assets was $40,606 Mil.
Property, Plant and Equipment(Net PPE) was $27,824 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,496 Mil.
Selling, General & Admin. Expense(SGA) was $2,773 Mil.
Total Current Liabilities was $3,998 Mil.
Long-Term Debt was $11,375 Mil.
Net Income was -2816 + -3599 + -408 + 1016 = $-5,807 Mil.
Non Operating Income was 4 + -15 + -39 + -10 = $-60 Mil.
Cash Flow from Operations was 1101 + 1648 + 963 + 1559 = $5,271 Mil.
Accounts Receivable was $1,784 Mil.
Revenue was 4510 + 3725 + 2624 + 2714 = $13,573 Mil.
Gross Profit was 3928 + 1822 + 1615 + 1731 = $9,096 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 $2,706 Mil.
Total Current Liabilities was $4,679 Mil.
Long-Term Debt was $11,880 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)
=(1557 / 17989) / (1784 / 13573)
=0.08655289 / 0.13143741
=0.6585

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)
=(1273 / 13573) / (2831 / 17989)
=0.67015398 / 0.59919951
=1.1184

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 - (4730 + 27824) / 40606) / (1 - (4392 + 36999) / 51115)
=0.19829582 / 0.1902377
=1.0424

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
=17989 / 13573
=1.3254

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))
=(2969 / (2969 + 36999)) / (3496 / (3496 + 27824))
=0.07428443 / 0.11162197
=0.6655

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)
=(2773 / 17989) / (2706 / 13573)
=0.15414976 / 0.19936639
=0.7732

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)
=((11375 + 3998) / 40606) / ((11880 + 4679) / 51115)
=0.37858937 / 0.32395579
=1.1686

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
=(-5807 - -60 - 5271) / 40606
=-0.2713

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 -3.75 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 -0.0861-0.0827-0.0727-0.3622-0.2431-0.0251-0.0367-0.117-0.126-0.083
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

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 1.58021.79431.21020.74281.09240.81220.68070.74190.52150.6585
GMI 1.10611.04020.96730.97210.98610.98881.05791.05391.01911.1184
AQI 0.99971.04381.0050.92231.19611.12991.1861.03360.91161.0424
SGI 0.76030.85291.08911.09431.35391.42811.56431.88191.57241.3254
DEPI 0.86120.90340.99591.04811.38721.27831.1171.06260.69680.6655
SGAI 1.42291.84871.41261.31921.16161.80971.69531.51751.73570.7732
LVGI 1.16461.0380.97351.02121.03181.01121.0190.91360.95541.1686
TATA -0.162-0.1637-0.1653-0.1266-0.0787-0.0923-0.0802-0.083-0.1846-0.2713
M-score -3.00-2.78-3.06-3.33-2.37-2.77-2.65-2.33-3.45-3.75
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