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Encana Corp (NYSE:ECA)
Beneish M-Score
-0.73 (As of Today)

Warning Sign:

Beneish M-Score -0.73 higher than -2.22, which implies that it might have manipulated its financial results.

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 -0.75 signals that the company is a manipulator.

ECA' s Beneish M-Score Range Over the Past 10 Years
Min: -4.63   Max: 19.02
Current: -0.73

-4.63
19.02

During the past 13 years, the highest Beneish M-Score of Encana Corp was 19.02. The lowest was -4.63. And the median was -2.63.


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 * 1.6096+0.528 * 1.3731+0.404 * 1.7474+0.892 * 0.5228+0.115 * 1.0365
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.7505+4.679 * 0.274-0.327 * 1.1941
=-0.75

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $632 Mil.
Revenue was 364 + 753 + 1031 + 1312 = $3,460 Mil.
Gross Profit was -124 + 222 + 468 + 716 = $1,282 Mil.
Total Current Assets was $1,280 Mil.
Total Assets was $14,926 Mil.
Property, Plant and Equipment(Net PPE) was $8,692 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,119 Mil.
Selling, General & Admin. Expense(SGA) was $259 Mil.
Total Current Liabilities was $1,379 Mil.
Long-Term Debt was $6,033 Mil.
Net Income was -601 + -379 + -612 + -1236 = $-2,828 Mil.
Non Operating Income was -546 + -459 + -6707 + -347 = $-8,059 Mil.
Cash Flow from Operations was 83 + 157 + 448 + 453 = $1,141 Mil.
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.



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)
=(632 / 3460) / (751 / 6618)
=0.18265896 / 0.11347839
=1.6096

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)
=(3367 / 6618) / (1282 / 3460)
=0.50876398 / 0.37052023
=1.3731

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 - (1280 + 8692) / 14926) / (1 - (2097 + 13329) / 19043)
=0.33190406 / 0.18993856
=1.7474

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
=3460 / 6618
=0.5228

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))
=(1787 / (1787 + 13329)) / (1119 / (1119 + 8692))
=0.11821911 / 0.11405565
=1.0365

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)
=(259 / 3460) / (283 / 6618)
=0.07485549 / 0.04276216
=1.7505

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)
=((6033 + 1379) / 14926) / ((6112 + 1807) / 19043)
=0.49658314 / 0.41584834
=1.1941

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
=(-2828 - -8059 - 1141) / 14926
=0.274

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 -0.75 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 0.80891.05780.43022.22281.17121.01911.35490.8531.03620.897
GMI 0.87351.47680.94390.79950.87561.05181.23661.03240.90581.2407
AQI 0.54851.561.45220.26671.31851.06612.40361.01410.80781.7566
SGI 1.14941.30781.40180.36970.79810.95460.60941.13531.36890.5514
DEPI 1.0081.03310.82280.94271.22150.88340.68761.23841.52770.6733
SGAI 0.28721.08340.87872.72790.9431.01551.84840.98650.54411.5251
LVGI 0.86291.33440.6861.30440.83371.05421.70510.98260.80711.0856
TATA -0.0749-0.1-0.074-0.1897-0.0304-0.12-0.3212-0.0983-0.08830.049
M-score -2.95-2.26-2.74-3.61-2.49-3.04-3.73-2.90-2.46-2.47

Encana Corp Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.83951.27441.39581.03620.68330.59430.74750.8971.22321.6096
GMI 0.78451.04471.05320.90581.00750.99821.03091.24071.3081.3731
AQI 0.95020.850.53040.80780.87271.15312.2751.75661.87341.7474
SGI 1.51381.10961.19011.36891.10241.05130.78530.55140.53230.5228
DEPI 1.0961.17820.99351.52771.30371.06521.11630.67330.86381.0365
SGAI 0.76531.11381.00370.54410.60410.58390.80311.52511.78391.7505
LVGI 0.92950.86510.7570.80710.84630.93271.20911.08561.10661.1941
TATA -0.0968-0.1525-0.1366-0.0889-0.0527-0.0133-0.03940.3060.28470.274
M-score -2.68-2.84-2.67-2.46-2.82-2.71-2.58-1.27-1.03-0.75
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