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Encana Corp (NYSE:ECA)
Beneish M-Score
-2.66 (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 -2.82 suggests that the company is not a manipulator.

ECA' s 10-Year Beneish M-Score Range
Min: -4.51   Max: 19.26
Current: -2.66

-4.51
19.26

During the past 13 years, the highest Beneish M-Score of Encana Corp was 19.26. The lowest was -4.51. And the median was -2.66.


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 * 0.6833+0.528 * 1.0075+0.404 * 0.8727+0.892 * 1.1024+0.115 * 1.3037
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.6041+4.679 * -0.0527-0.327 * 0.8463
=-2.82

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $940 Mil.
Revenue was 1249 + 2254 + 2285 + 1588 = $7,376 Mil.
Gross Profit was 580 + 1337 + 1234 + 835 = $3,986 Mil.
Total Current Assets was $4,062 Mil.
Total Assets was $22,836 Mil.
Property, Plant and Equipment(Net PPE) was $15,162 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,793 Mil.
Selling, General & Admin. Expense(SGA) was $297 Mil.
Total Current Liabilities was $3,314 Mil.
Long-Term Debt was $6,349 Mil.
Net Income was -1707 + 198 + 2807 + 271 = $1,569 Mil.
Non Operating Income was -2571 + -241 + 3024 + 355 = $567 Mil.
Cash Flow from Operations was 482 + 261 + 696 + 767 = $2,206 Mil.
Accounts Receivable was $1,248 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.



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)
=(940 / 7376) / (1248 / 6691)
=0.12744035 / 0.1865192
=0.6833

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)
=(1337 / 6691) / (580 / 7376)
=0.54446271 / 0.5404013
=1.0075

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 - (4062 + 15162) / 22836) / (1 - (4146 + 9930) / 17192)
=0.15817131 / 0.18124709
=0.8727

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
=7376 / 6691
=1.1024

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))
=(1588 / (1588 + 9930)) / (1793 / (1793 + 15162))
=0.13787116 / 0.10575052
=1.3037

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)
=(297 / 7376) / (446 / 6691)
=0.04026573 / 0.0666567
=0.6041

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)
=((6349 + 3314) / 22836) / ((6096 + 2500) / 17192)
=0.42314766 / 0.5
=0.8463

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
=(1569 - 567 - 2206) / 22836
=-0.0527

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 -2.82 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.85090.82621.04550.62161.55661.17120.92321.49570.8531.0362
GMI 0.95290.84621.54120.62281.1610.87661.02511.26731.03240.9058
AQI 0.99430.54851.561.45220.26671.31851.76291.45351.01410.8078
SGI 1.38911.12531.32330.97020.52790.79810.95460.60941.13531.3689
DEPI 0.95471.0081.03310.85670.90551.8960.52550.74481.23841.5277
SGAI 0.9520.8511.07081.19982.02140.95091.01291.83780.98650.5441
LVGI 0.98980.86291.33440.6861.30440.83371.63471.09971.04150.7614
TATA -0.1169-0.0735-0.0952-0.0644-0.1762-0.0069-0.1609-0.3212-0.0941-0.0883
M-score -2.84-3.06-2.20-3.12-3.71-2.31-3.29-3.76-2.90-2.44

Encana Corp Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 1.49572.60281.80390.99050.8530.83951.27441.39581.03620.6833
GMI 1.14181.4281.06840.80831.03240.78451.04471.05320.90581.0075
AQI 1.45351.59611.28351.05911.01410.95020.850.53040.80780.8727
SGI 0.60940.5140.77251.0041.13531.51381.10961.19011.36891.1024
DEPI 0.74480.90481.02551.10931.23841.0961.17820.99351.52771.3037
SGAI 1.83782.37031.40370.90210.98650.76531.11381.00370.54410.6041
LVGI 1.09971.1661.06790.99581.04150.92950.86510.7570.76140.8463
TATA -0.3157-0.3304-0.1982-0.1019-0.0949-0.0926-0.1493-0.1354-0.0883-0.0527
M-score -3.80-2.82-2.81-3.01-2.90-2.66-2.82-2.66-2.44-2.82
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