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Encana Corp (NYSE:ECA)
Beneish M-Score
-2.25 (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 -2.15 signals that the company is a manipulator.

ECA' s Beneish M-Score Range Over the Past 10 Years
Min: -4.66   Max: 19.02
Current: -2.25

-4.66
19.02

During the past 13 years, the highest Beneish M-Score of Encana Corp was 19.02. The lowest was -4.66. And the median was -2.51.


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 * 1.4928+0.528 * 1.6087+0.404 * 1.457+0.892 * 0.5539+0.115 * 1.1913
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.8971+4.679 * -0.0327-0.327 * 0.8504
=-2.15

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $583 Mil.
Revenue was 979 + 364 + 753 + 1031 = $3,127 Mil.
Gross Profit was 415 + -124 + 222 + 468 = $981 Mil.
Total Current Assets was $1,733 Mil.
Total Assets was $14,577 Mil.
Property, Plant and Equipment(Net PPE) was $8,004 Mil.
Depreciation, Depletion and Amortization(DDA) was $951 Mil.
Selling, General & Admin. Expense(SGA) was $289 Mil.
Total Current Liabilities was $1,283 Mil.
Long-Term Debt was $4,523 Mil.
Net Income was 317 + -601 + -379 + -612 = $-1,275 Mil.
Non Operating Income was 338 + -546 + -459 + -1005 = $-1,672 Mil.
Cash Flow from Operations was 186 + 83 + 157 + 448 = $874 Mil.
Accounts Receivable was $705 Mil.
Revenue was 1312 + 830 + 1249 + 2254 = $5,645 Mil.
Gross Profit was 716 + 216 + 580 + 1337 = $2,849 Mil.
Total Current Assets was $1,871 Mil.
Total Assets was $17,294 Mil.
Property, Plant and Equipment(Net PPE) was $11,482 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,663 Mil.
Selling, General & Admin. Expense(SGA) was $275 Mil.
Total Current Liabilities was $1,594 Mil.
Long-Term Debt was $6,506 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)
=(583 / 3127) / (705 / 5645)
=0.18644068 / 0.12488928
=1.4928

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)
=(2849 / 5645) / (981 / 3127)
=0.50469442 / 0.31371922
=1.6087

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 - (1733 + 8004) / 14577) / (1 - (1871 + 11482) / 17294)
=0.33202991 / 0.2278825
=1.457

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
=3127 / 5645
=0.5539

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))
=(1663 / (1663 + 11482)) / (951 / (951 + 8004))
=0.12651198 / 0.10619765
=1.1913

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)
=(289 / 3127) / (275 / 5645)
=0.09242085 / 0.04871568
=1.8971

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)
=((4523 + 1283) / 14577) / ((6506 + 1594) / 17294)
=0.39829869 / 0.46837053
=0.8504

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
=(-1275 - -1672 - 874) / 14577
=-0.0327

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 -2.15 signals that the company is likely to 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 local exchange's currency.

Encana Corp Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.82621.04550.62161.55661.17121.01911.35490.8531.03620.897
GMI 0.84621.54120.62281.1610.87661.05051.23661.03240.90581.2407
AQI 0.54851.561.45220.26671.31851.06612.40361.01410.79131.7933
SGI 1.12531.32330.97020.52790.79810.95460.60941.13531.36890.5514
DEPI 1.0081.03310.85670.90551.8960.56910.68761.23841.52770.6733
SGAI 0.8511.07081.19982.02140.95091.00711.84840.98650.54411.5251
LVGI 0.86291.33440.6861.30440.83371.05421.70511.04150.75461.0954
TATA -0.0749-0.1043-0.0729-0.1762-0.0069-0.12-0.0673-0.0941-0.08870.049
M-score -3.07-2.24-3.16-3.71-2.31-3.08-2.54-2.90-2.45-2.46

Encana Corp Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 1.27441.39581.03620.68330.59430.74750.8971.22321.60961.4928
GMI 1.04471.05320.90581.00750.99821.03091.24071.3081.37311.6087
AQI 0.850.53040.79130.87271.15312.2751.79331.87341.74741.457
SGI 1.10961.19011.36891.10241.05130.78530.55140.53230.52280.5539
DEPI 1.17820.99351.52771.30371.06521.11630.67330.86381.03651.1913
SGAI 1.11381.00370.54410.60410.58390.80311.52511.78391.75051.8971
LVGI 0.86510.7570.75460.84630.93271.20911.09541.10661.19410.8504
TATA -0.15-0.1366-0.0881-0.0522-0.01190.06010.0490.02030.0047-0.0327
M-score -2.82-2.67-2.44-2.82-2.70-2.11-2.46-2.27-2.01-2.15
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