Switch to:
Freeport-McMoRan Inc (NYSE:FCX)
Beneish M-Score
-2.49 (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 -2.49 suggests that the company is not a manipulator.

FCX' s 10-Year Beneish M-Score Range
Min: -5.46   Max: 2.23
Current: -2.49

-5.46
2.23

During the past 13 years, the highest Beneish M-Score of Freeport-McMoRan Inc was 2.23. The lowest was -5.46. And the median was -2.62.


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 * 1.1335+0.528 * 1.1939+0.404 * 1.1559+0.892 * 1.1854+0.115 * 0.7798
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.3018+4.679 * -0.0655-0.327 * 1.2562
=-2.49

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $2,377 Mil.
Revenue was 4985 + 5885 + 6165 + 4288 = $21,323 Mil.
Gross Profit was 1282 + 1930 + 1914 + 905 = $6,031 Mil.
Total Current Assets was $9,466 Mil.
Total Assets was $63,879 Mil.
Property, Plant and Equipment(Net PPE) was $50,538 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,434 Mil.
Selling, General & Admin. Expense(SGA) was $679 Mil.
Total Current Liabilities was $5,419 Mil.
Long-Term Debt was $19,759 Mil.
Net Income was 510 + 707 + 821 + 482 = $2,520 Mil.
Non Operating Income was 33 + -16 + 3 + 141 = $161 Mil.
Cash Flow from Operations was 1237 + 2396 + 1878 + 1034 = $6,545 Mil.
Accounts Receivable was $1,769 Mil.
Revenue was 4583 + 4513 + 4417 + 4475 = $17,988 Mil.
Gross Profit was 1535 + 1450 + 1527 + 1562 = $6,074 Mil.
Total Current Assets was $16,583 Mil.
Total Assets was $42,588 Mil.
Property, Plant and Equipment(Net PPE) was $23,770 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,241 Mil.
Selling, General & Admin. Expense(SGA) was $440 Mil.
Total Current Liabilities was $3,275 Mil.
Long-Term Debt was $10,088 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)
=(2377 / 21323) / (1769 / 17988)
=0.11147587 / 0.09834334
=1.1335

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)
=(1930 / 17988) / (1282 / 21323)
=0.33766956 / 0.28284013
=1.1939

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 - (9466 + 50538) / 63879) / (1 - (16583 + 23770) / 42588)
=0.06066156 / 0.05247957
=1.1559

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
=21323 / 17988
=1.1854

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))
=(1241 / (1241 + 23770)) / (3434 / (3434 + 50538))
=0.04961817 / 0.06362558
=0.7798

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)
=(679 / 21323) / (440 / 17988)
=0.03184355 / 0.02446075
=1.3018

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)
=((19759 + 5419) / 63879) / ((10088 + 3275) / 42588)
=0.39415144 / 0.31377383
=1.2562

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
=(2520 - 161 - 6545) / 63879
=-0.0655

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 -2.49 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 2.06560.89750.50980.9110.89081.76021.06570.42811.65381.3539
GMI 1.33230.6351.07871.32821.56320.58220.9181.06141.33211.1921
AQI 1.11280.94070.32848.56240.40780.44411.11951.30571.98620.8219
SGI 1.07221.76191.38572.92511.05060.84511.26211.10.86251.1616
DEPI 1.11840.81081.11021.44360.46271.71741.13241.11440.90870.9541
SGAI 1.04480.65641.08941.01470.54951.4120.94040.99021.20411.3123
LVGI 0.88080.84550.70930.89641.64550.80280.79850.70420.96012.046
TATA -0.0482-0.0989-0.0818-0.0816-0.6176-0.0595-0.0627-0.0639-0.0167-0.0561
M-score -1.39-2.49-3.112.08-5.56-2.57-2.38-2.95-1.54-2.64

Freeport-McMoRan Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.77780.89021.45631.65381.35341.47991.20861.35391.13351.1583
GMI 1.16861.34841.42531.33211.31331.30861.241.19211.19391.0475
AQI 1.30731.34681.39041.98620.89941.08481.02590.82191.15591.5421
SGI 0.97280.82760.79110.86250.90960.96551.1071.16161.18541.2672
DEPI 1.05541.05631.01310.90870.97761.61641.17080.95410.77980.3874
SGAI 1.04081.17561.1931.20411.19441.38711.29331.31231.30180.9801
LVGI 0.97380.88280.9130.96011.1992.20862.1122.0461.25620.9247
TATA -0.0317-0.039-0.0055-0.0167-0.0205-0.0165-0.0386-0.0561-0.0655-0.0686
M-score -2.64-2.58-1.89-1.54-2.31-2.34-2.63-2.64-2.49-2.22
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Email Hide