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Freeport-McMoRan Inc (NYSE:FCX)
Beneish M-Score
-4.85 (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.

Freeport-McMoRan Inc has a M-score of -4.85 suggests that the company is not a manipulator.

FCX' s 10-Year Beneish M-Score Range
Min: -5.86   Max: 2.23
Current: -4.85

-5.86
2.23

During the past 13 years, the highest Beneish M-Score of Freeport-McMoRan Inc was 2.23. The lowest was -5.86. And the median was -2.58.


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 Freeport-McMoRan 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 * 0.9612+0.528 * -0.9762+0.404 * 0.7732+0.892 * 0.857+0.115 * 0.9233
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.062+4.679 * -0.2119-0.327 * 1.1748
=-4.85

* 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 $2,272 Mil.
Revenue was 4248 + 4153 + 5235 + 5696 = $19,332 Mil.
Gross Profit was -2176 + -2802 + -2066 + 1291 = $-5,753 Mil.
Total Current Assets was $8,697 Mil.
Total Assets was $54,008 Mil.
Property, Plant and Equipment(Net PPE) was $41,056 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,713 Mil.
Selling, General & Admin. Expense(SGA) was $598 Mil.
Total Current Liabilities was $4,739 Mil.
Long-Term Debt was $20,111 Mil.
Net Income was -1841 + -2464 + -2842 + 562 = $-6,585 Mil.
Non Operating Income was -55 + 7 + -2 + 81 = $31 Mil.
Cash Flow from Operations was 1069 + 717 + 1118 + 1926 = $4,830 Mil.
Accounts Receivable was $2,758 Mil.
Revenue was 5522 + 4985 + 5885 + 6165 = $22,557 Mil.
Gross Profit was 1427 + 1282 + 1930 + 1914 = $6,553 Mil.
Total Current Assets was $10,254 Mil.
Total Assets was $64,009 Mil.
Property, Plant and Equipment(Net PPE) was $47,233 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,917 Mil.
Selling, General & Admin. Expense(SGA) was $657 Mil.
Total Current Liabilities was $7,558 Mil.
Long-Term Debt was $17,512 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)
=(2272 / 19332) / (2758 / 22557)
=0.11752535 / 0.12226803
=0.9612

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)
=(-2802 / 22557) / (-2176 / 19332)
=0.29050849 / -0.29758949
=-0.9762

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 - (8697 + 41056) / 54008) / (1 - (10254 + 47233) / 64009)
=0.07878462 / 0.10189192
=0.7732

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
=19332 / 22557
=0.857

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))
=(3917 / (3917 + 47233)) / (3713 / (3713 + 41056))
=0.07657869 / 0.08293685
=0.9233

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)
=(598 / 19332) / (657 / 22557)
=0.03093317 / 0.02912621
=1.062

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)
=((20111 + 4739) / 54008) / ((17512 + 7558) / 64009)
=0.46011702 / 0.39166367
=1.1748

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
=(-6585 - 31 - 4830) / 54008
=-0.2119

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.

Freeport-McMoRan Inc has a M-score of -4.85 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.

Freeport-McMoRan Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.10070.50980.86380.46583.27611.1080.41881.29021.34720.6487
GMI 0.6351.07871.32821.56320.58220.9181.06141.33211.19213.3295
AQI 0.94070.32848.56240.40780.44411.11951.30571.98620.82190.7532
SGI 1.76191.38572.92511.05060.84511.26211.10.86251.16161.0247
DEPI 0.81081.11021.44360.46271.71741.13241.11440.90870.95410.7119
SGAI 0.65641.08941.01470.54951.4120.94040.99021.20411.31230.8793
LVGI 0.84550.70930.89641.64550.80280.79850.70420.96012.0461.0151
TATA -0.0989-0.0818-0.0816-0.6176-0.0595-0.0627-0.0639-0.0167-0.0558-0.1192
M-score -2.30-3.112.04-5.95-1.17-2.34-2.96-1.87-2.65-2.23

Freeport-McMoRan Inc Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 1.35341.47991.20861.34721.13351.15830.9160.64871.04310.9612
GMI 1.31331.30861.241.19211.19391.04751.10593.3295-2.7108-0.9762
AQI 0.89941.08481.02590.82191.89441.54211.52640.75320.76040.7732
SGI 0.90960.96551.1071.16161.18541.26721.12991.02470.96640.857
DEPI 0.97761.61641.17080.95410.74410.38740.54880.71190.81370.9233
SGAI 1.19441.38711.29331.31231.30180.98011.00780.87930.93121.062
LVGI 1.1992.20862.1122.0461.25510.92470.93121.01511.09441.1748
TATA -0.0205-0.0164-0.0384-0.0558-0.0645-0.0675-0.0737-0.1192-0.1691-0.2119
M-score -2.31-2.34-2.63-2.65-2.19-2.21-2.55-2.23-5.36-4.85
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