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Encana Corp (NYSE:ECA)
Beneish M-Score
-1.61 (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 -1.67 signals that the company is a manipulator.

ECA' s Beneish M-Score Range Over the Past 10 Years
Min: -4.75   Max: 19.02
Current: -1.61

-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 -2.55.


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 * 1.2232+0.528 * 1.308+0.404 * 1.8734+0.892 * 0.5323+0.115 * 0.8638
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.7839+4.679 * 0.1471-0.327 * 1.1066
=-1.67

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $612 Mil.
Revenue was 753 + 1031 + 1312 + 830 = $3,926 Mil.
Gross Profit was 222 + 468 + 716 + 216 = $1,622 Mil.
Total Current Assets was $1,501 Mil.
Total Assets was $15,203 Mil.
Property, Plant and Equipment(Net PPE) was $9,197 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,283 Mil.
Selling, General & Admin. Expense(SGA) was $282 Mil.
Total Current Liabilities was $1,359 Mil.
Long-Term Debt was $5,760 Mil.
Net Income was -379 + -612 + -1236 + -1610 = $-3,837 Mil.
Non Operating Income was -459 + -6707 + -347 + 84 = $-7,429 Mil.
Cash Flow from Operations was 157 + 448 + 453 + 298 = $1,356 Mil.
Accounts Receivable was $940 Mil.
Revenue was 1249 + 2254 + 2285 + 1588 = $7,376 Mil.
Gross Profit was 580 + 1337 + 1234 + 835 = $3,986 Mil.
Total Current Assets was $4,062 Mil.
Total Assets was $22,836 Mil.
Property, Plant and Equipment(Net PPE) was $15,162 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,793 Mil.
Selling, General & Admin. Expense(SGA) was $297 Mil.
Total Current Liabilities was $3,314 Mil.
Long-Term Debt was $6,349 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)
=(612 / 3926) / (940 / 7376)
=0.15588385 / 0.12744035
=1.2232

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)
=(3986 / 7376) / (1622 / 3926)
=0.5404013 / 0.41314315
=1.308

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 - (1501 + 9197) / 15203) / (1 - (4062 + 15162) / 22836)
=0.29632309 / 0.15817131
=1.8734

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
=3926 / 7376
=0.5323

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))
=(1793 / (1793 + 15162)) / (1283 / (1283 + 9197))
=0.10575052 / 0.12242366
=0.8638

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)
=(282 / 3926) / (297 / 7376)
=0.07182883 / 0.04026573
=1.7839

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)
=((5760 + 1359) / 15203) / ((6349 + 3314) / 22836)
=0.46826284 / 0.42314766
=1.1066

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
=(-3837 - -7429 - 1356) / 15203
=0.1471

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 -1.67 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 0.80891.05780.43022.22281.17120.92321.49570.8531.03620.897
GMI 0.87351.47680.94390.79950.87561.05181.23661.03240.90581.2407
AQI 0.54851.561.45220.26671.31851.76291.45351.01410.79131.7933
SGI 1.14941.30781.40180.36970.79810.95460.60941.13531.36890.5514
DEPI 1.0081.03310.82280.94271.22150.57761.05171.23841.52770.6733
SGAI 0.28721.08340.87872.72790.9431.01551.84840.98650.54411.5251
LVGI 0.86291.33440.6861.30440.83371.63471.09971.04150.75461.0954
TATA -0.0749-0.1-0.074-0.1897-0.0304-0.1739-0.3212-0.0983-0.08870.049
M-score -2.95-2.26-2.74-3.61-2.49-3.33-3.74-2.92-2.45-2.46

Encana Corp Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.8530.83951.27441.39581.03620.68330.59430.74750.8971.2232
GMI 1.03240.78451.04471.05320.90581.00750.99821.03091.24071.308
AQI 1.01410.95020.850.53040.79130.87271.15312.2751.79331.8734
SGI 1.13531.51381.10961.19011.36891.10241.05130.78530.55140.5323
DEPI 1.23841.0961.17820.99351.52771.30371.06521.11630.67330.8638
SGAI 0.98650.76531.11381.00370.54410.60410.58390.80311.52511.7839
LVGI 1.04150.92950.86510.7570.75460.84630.93271.20911.09541.1066
TATA -0.0949-0.0926-0.15-0.1366-0.0881-0.0522-0.1218-0.15810.17230.1471
M-score -2.90-2.66-2.82-2.67-2.44-2.82-3.22-3.13-1.88-1.67
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