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GuruFocus has detected 3 Warning Signs with VAALCO Energy Inc $EGY.
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VAALCO Energy Inc (NYSE:EGY)
Beneish M-Score
-3.58 (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.

VAALCO Energy Inc has a M-score of -3.58 suggests that the company is not a manipulator.

EGY' s Beneish M-Score Range Over the Past 10 Years
Min: -9.63   Max: 83.22
Current: -3.58

-9.63
83.22

During the past 13 years, the highest Beneish M-Score of VAALCO Energy Inc was 83.22. The lowest was -9.63. And the median was -2.64.


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 VAALCO Energy Inc 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 * 1.697+0.528 * 0.4316+0.404 * 0.828+0.892 * 0.7432+0.115 * 2.176
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8442+4.679 * -0.2669-0.327 * 1.1699
=-3.58

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $6.75 Mil.
Revenue was 15.326 + 14.635 + 18.847 + 10.976 = $59.78 Mil.
Gross Profit was 3.496 + 7.473 + 11.506 + -0.278 = $22.20 Mil.
Total Current Assets was $38.48 Mil.
Total Assets was $81.03 Mil.
Property, Plant and Equipment(Net PPE) was $28.02 Mil.
Depreciation, Depletion and Amortization(DDA) was $8.35 Mil.
Selling, General & Admin. Expense(SGA) was $9.82 Mil.
Total Current Liabilities was $55.55 Mil.
Long-Term Debt was $6.94 Mil.
Net Income was -2.627 + -15.599 + -0.261 + -8.063 = $-26.55 Mil.
Non Operating Income was -1.482 + -0.149 + -0.363 + 0.524 = $-1.47 Mil.
Cash Flow from Operations was -3.416 + -1.665 + 1.809 + -0.18 = $-3.45 Mil.
Accounts Receivable was $5.35 Mil.
Revenue was 17.523 + 17.546 + 27.137 + 18.239 = $80.45 Mil.
Gross Profit was 4.064 + 9.687 + 18.27 + -19.131 = $12.89 Mil.
Total Current Assets was $63.74 Mil.
Total Assets was $123.96 Mil.
Property, Plant and Equipment(Net PPE) was $33.36 Mil.
Depreciation, Depletion and Amortization(DDA) was $33.30 Mil.
Selling, General & Admin. Expense(SGA) was $15.66 Mil.
Total Current Liabilities was $66.72 Mil.
Long-Term Debt was $15.00 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)
=(6.751 / 59.784) / (5.353 / 80.445)
=0.11292319 / 0.06654236
=1.697

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)
=(12.89 / 80.445) / (22.197 / 59.784)
=0.1602337 / 0.37128663
=0.4316

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 - (38.475 + 28.019) / 81.032) / (1 - (63.742 + 33.357) / 123.958)
=0.1794106 / 0.21667823
=0.828

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
=59.784 / 80.445
=0.7432

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))
=(33.302 / (33.302 + 33.357)) / (8.35 / (8.35 + 28.019))
=0.49958745 / 0.22959114
=2.176

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)
=(9.823 / 59.784) / (15.658 / 80.445)
=0.16430818 / 0.1946423
=0.8442

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)
=((6.94 + 55.554) / 81.032) / ((15 + 66.716) / 123.958)
=0.77122618 / 0.65922329
=1.1699

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
=(-26.55 - -1.47 - -3.452) / 81.032
=-0.2669

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.

VAALCO Energy Inc has a M-score of -3.58 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 local exchange's currency.

VAALCO Energy Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.41110.41612.4011.19330.14731.23011.35812.76210.43511.697
GMI 1.12140.9421.62910.62830.92791.29531.01660.85461.49851.3508
AQI 0.86141.01160.91140.14884.77461.02460.15515.72831.94830.828
SGI 1.27171.35570.68011.16631.56490.9280.86680.75430.630.7432
DEPI 0.4191.19920.8681.25770.83981.29641.44520.6860.31772.176
SGAI 2.63610.99371.30710.66260.89921.21851.10221.42671.9220.8468
LVGI 0.82691.73370.61430.67410.81451.84340.88431.44673.0641.1699
TATA -0.1302-0.3049-0.1523-0.0317-0.2063-0.3498-0.1045-0.4027-1.5811-0.2602
M-score -2.75-4.37-1.83-2.65-2.18-4.08-3.022.66-10.99-3.06

VAALCO Energy Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 2.75142.7622739.53320.71753.27990.43510.92941.29090.33061.697
GMI 0.58650.9691.13492.07072.87854.13721.14270.82320.690.4316
AQI 0.249815.72837.12517.798711.99461.94832.49212.96431.06170.828
SGI 0.99020.75430.76920.52720.52750.630.62090.69860.72110.7432
DEPI 0.94320.6860.61910.61470.44060.31770.35240.40230.60652.176
SGAI 1.31551.42671.55442.09121.60292.0521.60071.59071.69130.8442
LVGI 1.32541.44672.5122.20251.90443.0642.05421.79611.99261.1699
TATA -0.1268-0.4027-0.6456-0.6372-0.9323-1.5824-1.4244-1.4699-1.3385-0.2669
M-score -2.162.72675.66-3.46-0.20-9.63-9.39-9.09-10.23-3.58
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