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Encana Corp (NYSE:ECA)
Beneish M-Score
-1.72 (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 -1.88 signals that the company is a manipulator.

ECA' s Beneish M-Score Range Over the Past 10 Years
Min: -3.99   Max: -1.72
Current: -1.72

-3.99
-1.72

During the past 13 years, the highest Beneish M-Score of Encana Corp was -1.72. The lowest was -3.99. And the median was -2.82.


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 * 0.897+0.528 * 1.2407+0.404 * 1.7933+0.892 * 0.5514+0.115 * 0.6733
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.5251+4.679 * 0.1723-0.327 * 1.0954
=-1.88

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $602 Mil.
Revenue was 1031 + 1312 + 830 + 1249 = $4,422 Mil.
Gross Profit was 468 + 716 + 216 + 580 = $1,980 Mil.
Total Current Assets was $1,607 Mil.
Total Assets was $15,644 Mil.
Property, Plant and Equipment(Net PPE) was $9,857 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,488 Mil.
Selling, General & Admin. Expense(SGA) was $275 Mil.
Total Current Liabilities was $1,333 Mil.
Long-Term Debt was $5,716 Mil.
Net Income was -612 + -1236 + -1610 + -1707 = $-5,165 Mil.
Non Operating Income was -6707 + -347 + 84 + -2571 = $-9,541 Mil.
Cash Flow from Operations was 448 + 453 + 298 + 482 = $1,681 Mil.
Accounts Receivable was $1,217 Mil.
Revenue was 2254 + 2285 + 1588 + 1892 = $8,019 Mil.
Gross Profit was 1337 + 1234 + 835 + 1049 = $4,455 Mil.
Total Current Assets was $2,861 Mil.
Total Assets was $24,531 Mil.
Property, Plant and Equipment(Net PPE) was $18,015 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,745 Mil.
Selling, General & Admin. Expense(SGA) was $327 Mil.
Total Current Liabilities was $2,278 Mil.
Long-Term Debt was $7,813 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)
=(602 / 4422) / (1217 / 8019)
=0.13613749 / 0.15176456
=0.897

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)
=(716 / 8019) / (468 / 4422)
=0.55555556 / 0.44776119
=1.2407

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 - (1607 + 9857) / 15644) / (1 - (2861 + 18015) / 24531)
=0.26719509 / 0.14899515
=1.7933

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
=4422 / 8019
=0.5514

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))
=(1745 / (1745 + 18015)) / (1488 / (1488 + 9857))
=0.08830972 / 0.1311591
=0.6733

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 / 4422) / (327 / 8019)
=0.06218905 / 0.04077815
=1.5251

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)
=((5716 + 1333) / 15644) / ((7813 + 2278) / 24531)
=0.45058808 / 0.41135706
=1.0954

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
=(-5165 - -9541 - 1681) / 15644
=0.1723

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 -1.88 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 own currency.

Encana Corp Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.82621.04550.62161.55661.17120.92321.49570.8531.03620.897
GMI 0.84621.54120.62281.1610.87661.02511.26731.03240.90581.2407
AQI 0.54851.561.45220.26671.31851.76291.45351.01410.79131.7933
SGI 1.12531.32330.97020.52790.79810.95460.60941.13531.36890.5514
DEPI 1.0081.03310.85670.90551.8960.52550.74481.23841.52770.6733
SGAI 0.8511.07081.19982.02140.95091.01291.83780.98650.54411.5251
LVGI 0.86291.33440.6861.30440.83371.63471.09971.04150.75461.0954
TATA -0.0749-0.1043-0.0729-0.1762-0.0069-0.1609-0.0673-0.0941-0.08870.049
M-score -3.07-2.24-3.16-3.71-2.31-3.29-2.57-2.90-2.45-2.46

Encana Corp Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.99050.8530.83951.27441.39581.03620.68330.59430.74750.897
GMI 1.04831.03240.78451.04471.05320.90581.00750.99821.03091.2407
AQI 1.05911.01410.95020.850.53040.79130.87271.15312.2751.7933
SGI 1.0041.13531.51381.10961.19011.36891.10241.05130.78530.5514
DEPI 1.10931.23841.0961.17820.99351.52771.30371.06521.11630.6733
SGAI 0.90210.98650.76531.11381.00370.54410.60410.58390.80311.5251
LVGI 0.99581.04150.92950.86510.7570.75460.84630.93271.20911.0954
TATA 0.1563-0.0949-0.0926-0.15-0.1366-0.0881-0.0522-0.1218-0.15810.1723
M-score -1.67-2.90-2.66-2.82-2.67-2.44-2.82-3.22-3.13-1.88
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