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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.
Freeport-McMoRan Copper & Gold has a M-score of -2.64 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Freeport-McMoRan Copper & Gold was 2.18. The lowest was -5.46. And the median was -2.64.
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 Copper & Gold 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 * 1.3539||+||0.528 * 1.1921||+||0.404 * 0.8219||+||0.892 * 1.1616||+||0.115 * 0.9541|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.3123||+||4.679 * -0.0561||-||0.327 * 2.046|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $2,562 Mil.|
Revenue was 5885 + 6165 + 4288 + 4583 = $20,921 Mil.
Gross Profit was 1930 + 1914 + 905 + 1535 = $6,284 Mil.
Total Current Assets was $9,972 Mil.
Total Assets was $63,473 Mil.
Property, Plant and Equipment(Net PPE) was $47,401 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,797 Mil.
Selling, General & Admin. Expense(SGA) was $657 Mil.
Total Current Liabilities was $4,773 Mil.
Long-Term Debt was $20,394 Mil.
Net Income was 707 + 821 + 482 + 648 = $2,658 Mil.
Non Operating Income was -16 + 3 + 141 + -48 = $80 Mil.
Cash Flow from Operations was 2396 + 1878 + 1034 + 831 = $6,139 Mil.
|Accounts Receivable was $1,629 Mil.
Revenue was 4513 + 4417 + 4475 + 4605 = $18,010 Mil.
Gross Profit was 1450 + 1527 + 1562 + 1910 = $6,449 Mil.
Total Current Assets was $10,297 Mil.
Total Assets was $35,440 Mil.
Property, Plant and Equipment(Net PPE) was $20,999 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,179 Mil.
Selling, General & Admin. Expense(SGA) was $431 Mil.
Total Current Liabilities was $3,343 Mil.
Long-Term Debt was $3,525 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)|
|=||(2562 / 20921)||/||(1629 / 18010)|
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)|
|=||(1914 / 18010)||/||(1930 / 20921)|
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 - (9972 + 47401) / 63473)||/||(1 - (10297 + 20999) / 35440)|
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))|
|=||(1179 / (1179 + 20999))||/||(2797 / (2797 + 47401))|
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)|
|=||(657 / 20921)||/||(431 / 18010)|
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)|
|=||((20394 + 4773) / 63473)||/||((3525 + 3343) / 35440)|
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|
|=||(2658 - 80||-||6139)||/||63473|
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 Copper & Gold has a M-score of -2.64 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
Freeport-McMoRan Copper & Gold Annual Data
Freeport-McMoRan Copper & Gold Quarterly Data