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Encana Corp (NYSE:ECA)
Beneish M-Score
-3.05 (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 -3.08 suggests that the company is not a manipulator.

ECA' s 10-Year Beneish M-Score Range
Min: -4.24   Max: 6.11
Current: -3.05

-4.24
6.11

During the past 13 years, the highest Beneish M-Score of Encana Corp was 6.11. The lowest was -4.24. And the median was -2.67.


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 * 1.0077+0.528 * 1.0447+0.404 * 0.85+0.892 * 1.1096+0.115 * 1.1782
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1138+4.679 * -0.1525-0.327 * 0.8651
=-3.08

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $1,732 Mil.
Revenue was 1588 + 1892 + 1423 + 1392 = $6,295 Mil.
Gross Profit was 835 + 1049 + 622 + 691 = $3,197 Mil.
Total Current Assets was $4,574 Mil.
Total Assets was $18,722 Mil.
Property, Plant and Equipment(Net PPE) was $11,064 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,594 Mil.
Selling, General & Admin. Expense(SGA) was $461 Mil.
Total Current Liabilities was $2,226 Mil.
Long-Term Debt was $6,121 Mil.
Net Income was 271 + 116 + -251 + 188 = $324 Mil.
Non Operating Income was 355 + -225 + -164 + 106 = $72 Mil.
Cash Flow from Operations was 767 + 943 + 462 + 935 = $3,107 Mil.
Accounts Receivable was $1,549 Mil.
Revenue was 1984 + 1059 + 1605 + 1025 = $5,673 Mil.
Gross Profit was 1281 + 354 + 984 + 391 = $3,010 Mil.
Total Current Assets was $4,965 Mil.
Total Assets was $18,163 Mil.
Property, Plant and Equipment(Net PPE) was $9,678 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,686 Mil.
Selling, General & Admin. Expense(SGA) was $373 Mil.
Total Current Liabilities was $3,156 Mil.
Long-Term Debt was $6,205 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)
=(1732 / 6295) / (1549 / 5673)
=0.275139 / 0.27304777
=1.0077

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)
=(1049 / 5673) / (835 / 6295)
=0.53058347 / 0.50786338
=1.0447

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 - (4574 + 11064) / 18722) / (1 - (4965 + 9678) / 18163)
=0.16472599 / 0.19380058
=0.85

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
=6295 / 5673
=1.1096

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))
=(1686 / (1686 + 9678)) / (1594 / (1594 + 11064))
=0.14836325 / 0.12592827
=1.1782

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)
=(461 / 6295) / (373 / 5673)
=0.07323272 / 0.06575004
=1.1138

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)
=((6121 + 2226) / 18722) / ((6205 + 3156) / 18163)
=0.44583912 / 0.51538843
=0.8651

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
=(324 - 72 - 3107) / 18722
=-0.1525

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 -3.08 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 0.85090.82621.17590.67321.2781.58531.16341.43110.865
GMI 0.95290.84621.54120.62281.1610.87661.02511.26731.0324
AQI 0.99430.54851.561.45220.26671.31851.76291.45351.0141
SGI 1.38911.12531.32330.97020.52790.79810.95460.60941.1353
DEPI 0.95471.0081.03310.85670.90551.8960.52550.74481.2384
SGAI 0.9520.8511.07081.19982.02140.95091.01291.83780.9865
LVGI 0.98980.86291.33440.6861.30440.83371.63471.09970.9826
TATA -0.1169-0.0735-0.0952-0.0644-0.1762-0.0069-0.1609-0.3212-0.0983
M-score -2.84-3.06-2.08-3.07-3.97-1.92-3.07-3.82-2.89

Encana Corp Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.79010.96641.15711.43111.93461.23780.82710.8650.73681.0077
GMI 0.96721.07431.44851.14181.4281.06840.80831.03240.78451.0447
AQI 1.63621.08381.29411.45351.59611.28351.05911.01410.95020.85
SGI 1.22980.9780.80890.60940.5140.77251.0041.13531.51381.1096
DEPI 0.41330.33880.28730.74480.90481.02551.10931.23841.0961.1782
SGAI 0.62370.94551.43991.83782.37031.40370.90210.98650.76531.1138
LVGI 1.5311.58571.6481.09971.1661.06790.99580.98260.92950.8651
TATA -0.1382-0.2283-0.355-0.3157-0.3304-0.1982-0.1037-0.0975-0.096-0.1525
M-score -3.05-3.78-4.18-3.86-3.43-3.33-3.17-2.88-2.77-3.08
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