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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.
During the past 13 years, the highest Beneish M-Score of Equal Energy Ltd was 0.00. The lowest was 0.00. And the median was 0.00.
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 * 0.7099||+||0.528 * 0.8407||+||0.404 * 0.8347||+||0.892 * 1.2278||+||0.115 * 1.2981|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9991||+||4.679 * -0.0967||-||0.327 * 0.8896|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $13.40 Mil.|
Revenue was 20.084 + 15.382 + 16.592 + 18.329 = $70.39 Mil.
Gross Profit was 15.27 + 10.99 + 12.012 + 13.877 = $52.15 Mil.
Total Current Assets was $33.43 Mil.
Total Assets was $227.49 Mil.
Property, Plant and Equipment(Net PPE) was $164.03 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.38 Mil.
Selling, General & Admin. Expense(SGA) was $14.75 Mil.
Total Current Liabilities was $12.36 Mil.
Long-Term Debt was $40.71 Mil.
Net Income was 5.758 + 2.647 + -0.867 + 4.746 = $12.28 Mil.
Non Operating Income was 1.454 + 1.16 + -1.023 + 1.51 = $3.10 Mil.
Cash Flow from Operations was 8.243 + 6.995 + 8.006 + 7.933 = $31.18 Mil.
|Accounts Receivable was $15.37 Mil.
Revenue was 11.534 + 15.092 + 11.858 + 18.846 = $57.33 Mil.
Gross Profit was 7.153 + 10.469 + 5.182 + 12.906 = $35.71 Mil.
Total Current Assets was $37.81 Mil.
Total Assets was $226.95 Mil.
Property, Plant and Equipment(Net PPE) was $153.24 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.77 Mil.
Selling, General & Admin. Expense(SGA) was $12.03 Mil.
Total Current Liabilities was $15.22 Mil.
Long-Term Debt was $44.29 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(13.399 / 70.387)||/||(15.374 / 57.33)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(10.99 / 57.33)||/||(15.27 / 70.387)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (33.426 + 164.033) / 227.491)||/||(1 - (37.812 + 153.243) / 226.947)|
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.
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))|
|=||(21.769 / (21.769 + 153.243))||/||(17.383 / (17.383 + 164.033))|
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)|
|=||(14.75 / 70.387)||/||(12.025 / 57.33)|
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)|
|=||((40.707 + 12.36) / 227.491)||/||((44.294 + 15.219) / 226.947)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(12.284 - 3.101||-||31.177)||/||227.491|
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 -3.08 suggests that the company will not be a manipulator.
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
Equal Energy Ltd Annual Data
Equal Energy Ltd Quarterly Data