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Encana Corp (NYSE:ECA)
Beneish M-Score
-2.32 (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 -2.44 suggests that the company is not a manipulator.

ECA' s 10-Year Beneish M-Score Range
Min: -3.99   Max: -2.15
Current: -2.32

-3.99
-2.15

During the past 13 years, the highest Beneish M-Score of Encana Corp was -2.15. The lowest was -3.99. And the median was -2.85.


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 * 1.0362+0.528 * 0.9058+0.404 * 0.8078+0.892 * 1.3689+0.115 * 1.5277
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.5441+4.679 * -0.0889-0.327 * 0.7614
=-2.44

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
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 $24,621 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 $2,406 Mil.
Long-Term Debt was $7,813 Mil.
Net Income was 198 + 2807 + 271 + 116 = $3,392 Mil.
Non Operating Income was -241 + 3024 + 355 + -225 = $2,913 Mil.
Cash Flow from Operations was 261 + 696 + 767 + 943 = $2,667 Mil.
Accounts Receivable was $858 Mil.
Revenue was 1423 + 1392 + 1984 + 1059 = $5,858 Mil.
Gross Profit was 622 + 691 + 1281 + 354 = $2,948 Mil.
Total Current Assets was $4,290 Mil.
Total Assets was $17,648 Mil.
Property, Plant and Equipment(Net PPE) was $10,035 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,565 Mil.
Selling, General & Admin. Expense(SGA) was $439 Mil.
Total Current Liabilities was $2,952 Mil.
Long-Term Debt was $6,668 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)
=(1217 / 8019) / (858 / 5858)
=0.15176456 / 0.14646637
=1.0362

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)
=(1234 / 5858) / (1337 / 8019)
=0.50324343 / 0.55555556
=0.9058

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 - (2861 + 18015) / 24621) / (1 - (4290 + 10035) / 17648)
=0.15210593 / 0.18829329
=0.8078

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
=8019 / 5858
=1.3689

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))
=(1565 / (1565 + 10035)) / (1745 / (1745 + 18015))
=0.13491379 / 0.08830972
=1.5277

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)
=(327 / 8019) / (439 / 5858)
=0.04077815 / 0.07494025
=0.5441

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)
=((7813 + 2406) / 24621) / ((6668 + 2952) / 17648)
=0.41505219 / 0.54510426
=0.7614

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
=(3392 - 2913 - 2667) / 24621
=-0.0889

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 -2.44 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 0.95290.84621.54120.62281.1610.87661.02511.26731.03240.9058
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 -2.84-3.06-2.20-3.12-3.71-2.31-3.29-3.76-2.90-2.44

Encana Corp Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.86581.49572.60281.80390.99050.8530.83951.27441.39581.0362
GMI 1.44851.14181.4281.06840.80831.03240.78451.04471.05320.9058
AQI 1.29411.45351.59611.28351.05911.01410.95020.850.53040.8078
SGI 0.80890.60940.5140.77251.0041.13531.51381.10961.19011.3689
DEPI 0.28730.74480.90481.02551.10931.23841.0961.17820.99351.5277
SGAI 1.43991.83782.37031.40370.90210.98650.76531.11381.00370.5441
LVGI 1.6481.09971.1661.06790.99581.04150.92950.86510.7570.7614
TATA -0.355-0.3157-0.3304-0.1982-0.1019-0.0949-0.0934-0.15-0.136-0.0889
M-score -4.45-3.80-2.82-2.81-3.01-2.90-2.67-2.82-2.67-2.44
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