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Encana Corp (NYSE:ECA)
Beneish M-Score
-2.97 (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 -3.13 suggests that the company is not a manipulator.

ECA' s Beneish M-Score Range Over the Past 10 Years
Min: -4.75   Max: 19.02
Current: -2.97

-4.75
19.02

During the past 13 years, the highest Beneish M-Score of Encana Corp was 19.02. The lowest was -4.75. 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 * 0.7475+0.528 * 1.0289+0.404 * 2.275+0.892 * 0.7853+0.115 * 1.1163
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8031+4.679 * -0.1581-0.327 * 1.2091
=-3.13

* 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 $705 Mil.
Revenue was 1312 + 830 + 1249 + 2254 = $5,645 Mil.
Gross Profit was 743 + 242 + 599 + 1373 = $2,957 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.
Net Income was -1236 + -1610 + -1707 + 198 = $-4,355 Mil.
Non Operating Income was -347 + 84 + -2571 + -280 = $-3,114 Mil.
Cash Flow from Operations was 453 + 298 + 482 + 261 = $1,494 Mil.
Accounts Receivable was $1,201 Mil.
Revenue was 2285 + 1588 + 1892 + 1423 = $7,188 Mil.
Gross Profit was 1251 + 868 + 1096 + 659 = $3,874 Mil.
Total Current Assets was $8,969 Mil.
Total Assets was $21,334 Mil.
Property, Plant and Equipment(Net PPE) was $10,228 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,682 Mil.
Selling, General & Admin. Expense(SGA) was $436 Mil.
Total Current Liabilities was $2,178 Mil.
Long-Term Debt was $6,086 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)
=(705 / 5645) / (1201 / 7188)
=0.12488928 / 0.16708403
=0.7475

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)
=(242 / 7188) / (743 / 5645)
=0.53895381 / 0.5238264
=1.0289

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 - (1871 + 11482) / 17294) / (1 - (8969 + 10228) / 21334)
=0.2278825 / 0.10016874
=2.275

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
=5645 / 7188
=0.7853

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))
=(1682 / (1682 + 10228)) / (1663 / (1663 + 11482))
=0.14122586 / 0.12651198
=1.1163

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)
=(275 / 5645) / (436 / 7188)
=0.04871568 / 0.06065665
=0.8031

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)
=((6506 + 1594) / 17294) / ((6086 + 2178) / 21334)
=0.46837053 / 0.38736289
=1.2091

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
=(-4355 - -3114 - 1494) / 17294
=-0.1581

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 -3.13 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 0.95290.84621.54120.62281.1610.84591.02581.26281.02620.9196
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 -2.84-3.06-2.20-3.12-3.71-2.32-3.29-3.76-2.90-2.43

Encana Corp Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 1.80390.99050.8530.83951.27441.39581.03620.68330.59430.7475
GMI 1.2191.08561.02620.79461.03971.05770.91961.02371.01611.0289
AQI 1.28351.05911.01410.95020.850.53040.80780.87271.15312.275
SGI 0.77251.0041.13531.51381.10961.19011.36891.10241.05130.7853
DEPI 1.02551.10931.23841.0961.17820.99351.52771.30371.06521.1163
SGAI 1.40370.90210.98650.76531.11381.00370.54410.60410.58390.8031
LVGI 1.06790.99581.04150.92950.86510.7570.76140.84630.93271.2091
TATA -0.1982-0.1019-0.0949-0.0926-0.15-0.1366-0.0878-0.0522-0.1218-0.1581
M-score -2.73-2.86-2.90-2.66-2.83-2.67-2.43-2.81-3.21-3.13
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