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Encana Corp (NYSE:ECA)
Beneish M-Score
-3.08 (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 -3.22 suggests that the company is not a manipulator.

ECA' s 10-Year Beneish M-Score Range
Min: -4.75   Max: 19.02
Current: -3.08

-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 -2.66.


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 * 0.5943+0.528 * 0.9982+0.404 * 1.1531+0.892 * 1.0513+0.115 * 1.0652
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.5839+4.679 * -0.1231-0.327 * 0.9327
=-3.22

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $751 Mil.
Revenue was 830 + 1249 + 2254 + 2285 = $6,618 Mil.
Gross Profit was 216 + 580 + 1337 + 1234 = $3,367 Mil.
Total Current Assets was $2,097 Mil.
Total Assets was $19,043 Mil.
Property, Plant and Equipment(Net PPE) was $13,329 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,787 Mil.
Selling, General & Admin. Expense(SGA) was $283 Mil.
Total Current Liabilities was $1,807 Mil.
Long-Term Debt was $6,112 Mil.
Net Income was -1610 + -1707 + 198 + 2807 = $-312 Mil.
Non Operating Income was 84 + -2571 + -241 + 3024 = $296 Mil.
Cash Flow from Operations was 298 + 482 + 261 + 696 = $1,737 Mil.
Accounts Receivable was $1,202 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.



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)
=(751 / 6618) / (1202 / 6295)
=0.11347839 / 0.19094519
=0.5943

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)
=(580 / 6295) / (216 / 6618)
=0.50786338 / 0.50876398
=0.9982

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 - (2097 + 13329) / 19043) / (1 - (4574 + 11064) / 18722)
=0.18993856 / 0.16472599
=1.1531

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
=6618 / 6295
=1.0513

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))
=(1594 / (1594 + 11064)) / (1787 / (1787 + 13329))
=0.12592827 / 0.11821911
=1.0652

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)
=(283 / 6618) / (461 / 6295)
=0.04276216 / 0.07323272
=0.5839

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)
=((6112 + 1807) / 19043) / ((6121 + 2226) / 18722)
=0.41584834 / 0.44583912
=0.9327

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
=(-312 - 296 - 1737) / 19043
=-0.1231

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 -3.22 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 0.85090.82621.04550.62161.55661.17121.01911.35490.8531.0362
GMI 0.95290.84621.54120.62281.1610.87561.05181.23661.03240.9058
AQI 0.99430.54851.561.45220.26671.31851.06612.40361.01410.8078
SGI 1.38911.12531.32330.97020.52790.79810.95460.60941.13531.3689
DEPI 0.95471.0081.03310.85670.90551.22150.88340.68761.23841.5277
SGAI 0.9520.8511.07081.19982.02140.9431.01551.84840.98650.5441
LVGI 0.98980.86291.33440.6861.30440.83371.05421.70510.98260.8071
TATA -0.1169-0.0735-0.0952-0.0644-0.1777-0.0304-0.12-0.3212-0.0983-0.0883
M-score -2.84-3.06-2.20-3.12-3.72-2.49-3.04-3.73-2.90-2.46

Encana Corp Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 2.60281.80390.99050.8530.83951.27441.39581.03620.68330.5943
GMI 1.99621.40971.41550.86760.60670.89620.83690.90581.00750.9982
AQI 1.59611.28351.05911.01410.95020.850.53040.80780.87271.1531
SGI 0.5140.77251.0041.13531.51381.10961.19011.36891.10241.0513
DEPI 1.18991.25381.24311.23841.0961.17820.99351.52771.30371.0652
SGAI 2.38541.41190.90660.98650.76531.11381.00370.54410.60410.5839
LVGI 1.1661.06790.99580.98260.92950.86510.7570.80710.84630.9327
TATA -0.3358-0.2044-0.1098-0.1038-0.0961-0.1525-0.1366-0.0889-0.0533-0.1231
M-score -2.51-2.63-2.71-3.01-2.77-2.91-2.78-2.46-2.82-3.22
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