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Encana Corp (NYSE:ECA)
Beneish M-Score
-2.71 (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: -4.75   Max: 19.26
Current: -2.71

-4.75
19.26

During the past 13 years, the highest Beneish M-Score of Encana Corp was 19.26. 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 * 1.3958+0.528 * 0.8369+0.404 * 0.5304+0.892 * 1.1901+0.115 * 0.9935
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0037+4.679 * -0.1366-0.327 * 0.757
=-2.78

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $1,201 Mil.
Revenue was 2285 + 1588 + 1892 + 1423 = $7,188 Mil.
Gross Profit was 1234 + 835 + 1049 + 622 = $3,740 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.
Net Income was 2807 + 271 + 116 + -251 = $2,943 Mil.
Non Operating Income was 3024 + 355 + -225 + -164 = $2,990 Mil.
Cash Flow from Operations was 696 + 767 + 943 + 462 = $2,868 Mil.
Accounts Receivable was $723 Mil.
Revenue was 1392 + 1984 + 1059 + 1605 = $6,040 Mil.
Gross Profit was 691 + 1281 + 354 + 304 = $2,630 Mil.
Total Current Assets was $4,973 Mil.
Total Assets was $18,383 Mil.
Property, Plant and Equipment(Net PPE) was $9,938 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,622 Mil.
Selling, General & Admin. Expense(SGA) was $365 Mil.
Total Current Liabilities was $3,187 Mil.
Long-Term Debt was $6,220 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)
=(1201 / 7188) / (723 / 6040)
=0.16708403 / 0.11970199
=1.3958

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)
=(835 / 6040) / (1234 / 7188)
=0.43543046 / 0.52031163
=0.8369

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 - (8969 + 10228) / 21334) / (1 - (4973 + 9938) / 18383)
=0.10016874 / 0.18887015
=0.5304

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
=7188 / 6040
=1.1901

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))
=(1622 / (1622 + 9938)) / (1682 / (1682 + 10228))
=0.14031142 / 0.14122586
=0.9935

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)
=(436 / 7188) / (365 / 6040)
=0.06065665 / 0.06043046
=1.0037

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)
=((6086 + 2178) / 21334) / ((6220 + 3187) / 18383)
=0.38736289 / 0.51172279
=0.757

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
=(2943 - 2990 - 2868) / 21334
=-0.1366

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 0.85090.82621.04550.62161.55661.17121.01911.35490.853
GMI 0.95290.84621.54120.62281.1610.87561.05181.23661.0324
AQI 0.99430.54851.561.45220.26671.31851.06612.40361.0141
SGI 1.38911.12531.32330.97020.52790.79810.95460.60941.1353
DEPI 0.95471.0081.03310.85670.90551.22150.88340.68761.2384
SGAI 0.9520.8511.07081.19982.02140.9431.01551.84840.9865
LVGI 0.98980.86291.33440.6861.30440.83371.05421.70510.9826
TATA -0.1169-0.0735-0.0952-0.0644-0.1777-0.0304-0.12-0.3212-0.0983
M-score -2.84-3.06-2.20-3.12-3.72-2.49-3.04-3.73-2.90

Encana Corp Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.56960.86581.35492.60281.80390.99050.8530.83951.27441.3958
GMI 0.92090.95681.47151.99621.40971.41550.86760.60670.89620.8369
AQI 1.08381.29412.40361.59611.28351.05911.01410.95020.850.5304
SGI 0.9780.80890.60940.5140.77251.0041.13531.51381.10961.1901
DEPI 0.5770.64590.68761.18991.25381.24311.23841.0961.17820.9935
SGAI 0.93751.4411.84842.38541.41190.90660.98650.76531.11381.0037
LVGI 1.58571.6481.70511.1661.06790.99580.98260.92950.86510.757
TATA -0.2717-0.3587-0.3212-0.3358-0.2044-0.1098-0.1038-0.0968-0.1525-0.1366
M-score -4.40-4.68-3.60-2.51-2.63-2.71-3.01-2.78-2.91-2.78
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