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Equal Energy Ltd. (NYSE:EQU)
Beneish M-Score
-3.18 (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.

Equal Energy Ltd. has a M-score of -3.18 suggests that the company is not a manipulator.

EQU' s 10-Year Beneish M-Score Range
Min: -10000000   Max: 87.23
Current: -3.18

-10000000
87.23

During the past 13 years, the highest Beneish M-Score of Equal Energy Ltd. was 87.23. The lowest was -10000000.00. And the median was -2.80.


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 Equal Energy Ltd. 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 * 0.9535+0.528 * 0.876+0.404 * 0.8758+0.892 * 0.9605+0.115 * 1.384
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.3608+4.679 * -0.1057-0.327 * 0.9747
=-3.18

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $13.58 Mil.
Revenue was 15.382 + 16.592 + 18.329 + 11.534 = $61.84 Mil.
Gross Profit was 10.99 + 12.012 + 13.877 + 7.153 = $44.03 Mil.
Total Current Assets was $30.26 Mil.
Total Assets was $228.39 Mil.
Property, Plant and Equipment(Net PPE) was $166.23 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.73 Mil.
Selling, General & Admin. Expense(SGA) was $14.59 Mil.
Total Current Liabilities was $17.75 Mil.
Long-Term Debt was $42.31 Mil.
Net Income was 2.647 + -0.867 + 4.746 + 1.532 = $8.06 Mil.
Non Operating Income was 1.16 + -1.023 + 1.51 + 0 = $1.65 Mil.
Cash Flow from Operations was 6.995 + 8.006 + 7.933 + 7.612 = $30.55 Mil.
Accounts Receivable was $14.83 Mil.
Revenue was 15.092 + 11.858 + 18.846 + 18.585 = $64.38 Mil.
Gross Profit was 10.469 + 5.182 + 12.906 + 11.603 = $40.16 Mil.
Total Current Assets was $42.48 Mil.
Total Assets was $227.52 Mil.
Property, Plant and Equipment(Net PPE) was $148.76 Mil.
Depreciation, Depletion and Amortization(DDA) was $22.90 Mil.
Selling, General & Admin. Expense(SGA) was $11.16 Mil.
Total Current Liabilities was $16.16 Mil.
Long-Term Debt was $45.23 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)
=(13.581 / 61.837) / (14.83 / 64.381)
=0.21962579 / 0.23034746
=0.9535

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)
=(12.012 / 64.381) / (10.99 / 61.837)
=0.62378652 / 0.71206559
=0.876

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 - (30.263 + 166.227) / 228.385) / (1 - (42.479 + 148.762) / 227.521)
=0.13965453 / 0.15945781
=0.8758

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
=61.837 / 64.381
=0.9605

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))
=(22.9 / (22.9 + 148.762)) / (17.732 / (17.732 + 166.227))
=0.13340168 / 0.09639104
=1.384

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)
=(14.592 / 61.837) / (11.164 / 64.381)
=0.23597523 / 0.1734052
=1.3608

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)
=((42.309 + 17.753) / 228.385) / ((45.23 + 16.161) / 227.521)
=0.26298575 / 0.26982564
=0.9747

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
=(8.058 - 1.647 - 30.546) / 228.385
=-0.1057

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.

Equal Energy Ltd. has a M-score of -3.18 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.

Equal Energy Ltd. Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.18891.54880.71420.92041.14041.64250.63441.44530.91370.9531
GMI 1.47860.98430.94821.27490.81151.25880.86930.71021.18920.8759
AQI 221.65930.50130.86720.06564.92910.3612.285212.28530.47830.8758
SGI 1.62031.51111.54040.9971.08280.53511.1780.53760.83940.9609
DEPI 0.93411.3970.57491.13531.27340.94081.51141.53510.57741.384
SGAI 0.87331.59411.27561.4220.62082.06651.01960.90381.23731.3602
LVGI 0.65660.90511.5061.33860.7871.0811.04081.3470.41640.9747
TATA -0.1136-0.0732-0.0764-0.2365-0.1439-0.2006-0.1868-0.1285-0.0477-0.1091
M-score 87.24-2.10-2.96-4.06-1.30-3.58-3.041.29-2.94-3.19

Equal Energy Ltd. Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 0.8921.3491.19010.97730.96350.9535
GMI 0.96620.72270.60011.16891.32150.876
AQI 0.477612.28530.37940.47837.30710.8758
SGI 1.14840.57590.52040.78480.83290.9605
DEPI 3.01511.52085.1730.57740.18681.384
SGAI 0.86320.88870.7771.25851.64241.3608
LVGI 1.31671.3470.83180.41640.62590.9747
TATA -0.0814-0.1269-0.0935-0.0365-0.0247-0.1057
M-score -2.911.25-3.06-2.89-0.14-3.18
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