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Encana Corp (NYSE:ECA)
Beneish M-Score
-2.78 (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.

Encana Corp has a M-score of -2.78 suggests that the company is not a manipulator.

ECA' s 10-Year Beneish M-Score Range
Min: -4.18   Max: 4.22
Current: -2.78

-4.18
4.22

During the past 13 years, the highest Beneish M-Score of Encana Corp was 4.22. The lowest was -4.18. 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 Encana 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 * 0.7368+0.528 * 0.7845+0.404 * 0.9502+0.892 * 1.5138+0.115 * 1.096
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.7653+4.679 * -0.0968-0.327 * 0.9295
=-2.78

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $1,788 Mil.
Revenue was 1892 + 1423 + 1392 + 1984 = $6,691 Mil.
Gross Profit was 1049 + 622 + 691 + 1281 = $3,643 Mil.
Total Current Assets was $4,146 Mil.
Total Assets was $17,192 Mil.
Property, Plant and Equipment(Net PPE) was $9,930 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,588 Mil.
Selling, General & Admin. Expense(SGA) was $446 Mil.
Total Current Liabilities was $2,500 Mil.
Long-Term Debt was $6,096 Mil.
Net Income was 116 + -251 + 188 + 730 = $783 Mil.
Non Operating Income was -225 + -164 + 106 + -163 = $-446 Mil.
Cash Flow from Operations was 943 + 462 + 935 + 554 = $2,894 Mil.
Accounts Receivable was $1,603 Mil.
Revenue was 1059 + 1605 + 1025 + 731 = $4,420 Mil.
Gross Profit was 354 + 984 + 391 + 159 = $1,888 Mil.
Total Current Assets was $4,710 Mil.
Total Assets was $18,066 Mil.
Property, Plant and Equipment(Net PPE) was $9,910 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,764 Mil.
Selling, General & Admin. Expense(SGA) was $385 Mil.
Total Current Liabilities was $2,559 Mil.
Long-Term Debt was $7,159 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)
=(1788 / 6691) / (1603 / 4420)
=0.26722463 / 0.36266968
=0.7368

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)
=(622 / 4420) / (1049 / 6691)
=0.42714932 / 0.54446271
=0.7845

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 - (4146 + 9930) / 17192) / (1 - (4710 + 9910) / 18066)
=0.18124709 / 0.19074505
=0.9502

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
=6691 / 4420
=1.5138

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))
=(1764 / (1764 + 9910)) / (1588 / (1588 + 9930))
=0.15110502 / 0.13787116
=1.096

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)
=(446 / 6691) / (385 / 4420)
=0.0666567 / 0.08710407
=0.7653

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)
=((6096 + 2500) / 17192) / ((7159 + 2559) / 18066)
=0.5 / 0.53791653
=0.9295

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
=(783 - -446 - 2894) / 17192
=-0.0968

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.

Encana Corp has a M-score of -2.78 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.

Encana Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.85090.82621.17590.67321.2781.58531.16341.43110.865
GMI 0.95290.84621.54120.62281.1610.87661.02511.26731.0324
AQI 0.99430.54851.561.45220.26671.31851.76291.45351.0141
SGI 1.38911.12531.32330.97020.52790.79810.95460.60941.1353
DEPI 0.95471.0081.03310.85670.90551.8960.52550.74481.2384
SGAI 0.9520.8511.07081.19982.02140.95091.01291.83780.9865
LVGI 0.98980.86291.33440.6861.30440.83371.63471.09970.9826
TATA -0.1169-0.0735-0.0952-0.0644-0.1762-0.0069-0.1609-0.3212-0.0983
M-score -2.84-3.06-2.08-3.07-3.97-1.92-3.07-3.82-2.89

Encana Corp Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 1.16340.79010.96641.15711.43111.93461.23780.82710.8650.7368
GMI 1.13780.96721.07431.44851.14181.4281.06840.80831.03240.7845
AQI 1.76291.63621.08381.29411.45351.59611.28351.05911.01410.9502
SGI 0.95461.22980.9780.80890.60940.5140.77251.0041.13531.5138
DEPI 0.52550.41330.33880.28730.74480.90481.02551.10931.23841.096
SGAI 1.01290.62370.94551.43991.83782.37031.40370.90210.98650.7653
LVGI 1.63471.5311.58571.6481.09971.1661.06790.99580.98260.9295
TATA -0.1609-0.1382-0.2283-0.355-0.3157-0.3304-0.199-0.1045-0.0983-0.0968
M-score -3.01-3.05-3.78-4.18-3.86-3.43-3.33-3.17-2.89-2.78
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