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Freeport-McMoRan Inc (NYSE:FCX)
Beneish M-Score
-1.86 (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 -1.86 signals that the company is a manipulator.

FCX' s 10-Year Beneish M-Score Range
Min: -5.86   Max: 2.14
Current: -1.86

-5.86
2.14

During the past 13 years, the highest Beneish M-Score of Freeport-McMoRan Inc was 2.14. The lowest was -5.86. And the median was -2.60.


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 * 1.0456+0.528 * 3.3295+0.404 * 0.7534+0.892 * 1.0247+0.115 * 0.7121
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8793+4.679 * -0.1197-0.327 * 1.0164
=-1.86

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $2,296 Mil.
Revenue was 5235 + 5696 + 5522 + 4985 = $21,438 Mil.
Gross Profit was -2066 + 1291 + 1427 + 1282 = $1,934 Mil.
Total Current Assets was $9,032 Mil.
Total Assets was $58,795 Mil.
Property, Plant and Equipment(Net PPE) was $45,506 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,863 Mil.
Selling, General & Admin. Expense(SGA) was $592 Mil.
Total Current Liabilities was $5,203 Mil.
Long-Term Debt was $18,492 Mil.
Net Income was -2842 + 552 + 482 + 510 = $-1,298 Mil.
Non Operating Income was -2 + 81 + -3 + 33 = $109 Mil.
Cash Flow from Operations was 1118 + 1926 + 1350 + 1237 = $5,631 Mil.
Accounts Receivable was $2,143 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.



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)
=(2296 / 21438) / (2143 / 20921)
=0.10709954 / 0.10243296
=1.0456

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)
=(1291 / 20921) / (-2066 / 21438)
=0.30036805 / 0.09021364
=3.3295

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 - (9032 + 45506) / 58795) / (1 - (9972 + 47401) / 63473)
=0.07240412 / 0.09610386
=0.7534

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
=21438 / 20921
=1.0247

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))
=(2797 / (2797 + 47401)) / (3863 / (3863 + 45506))
=0.05571935 / 0.07824748
=0.7121

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)
=(592 / 21438) / (657 / 20921)
=0.02761452 / 0.03140385
=0.8793

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)
=((18492 + 5203) / 58795) / ((20394 + 4773) / 63473)
=0.40301046 / 0.3964993
=1.0164

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
=(-1298 - 109 - 5631) / 58795
=-0.1197

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 -1.86 signals that the company is likely to 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 1.10070.50980.86380.46583.27611.1080.44621.21111.54641.0456
GMI 0.6351.07871.32821.56320.58220.91991.05931.33211.19213.3295
AQI 0.94070.32848.56240.40781.00440.4951.30571.04921.55590.7534
SGI 1.76191.38572.92511.05060.84511.26211.10.86251.16161.0247
DEPI 0.81081.11021.44360.46271.59571.12461.20750.98880.87680.7121
SGAI 0.65641.08941.01470.54951.4120.94040.99021.20411.31230.8793
LVGI 0.84550.70930.89641.64550.80280.79850.70420.96012.0461.0164
TATA -0.0989-0.0818-0.0816-0.6176-0.0595-0.0627-0.0639-0.0167-0.0561-0.1192
M-score -2.30-3.112.04-5.95-0.96-2.60-2.92-2.31-2.18-1.86

Freeport-McMoRan Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.45631.21111.35341.47991.20861.54640.72061.15830.9161.0456
GMI 1.42361.33211.31331.30861.241.19211.19391.04751.10593.3295
AQI 1.39041.04920.89941.08481.02591.55591.15591.54211.52640.7534
SGI 0.79110.86250.90960.96551.1071.16161.18541.26721.12991.0247
DEPI 1.1010.98880.97761.61641.17080.87680.77980.38740.54880.7121
SGAI 1.1931.20411.19441.38711.29331.31231.30180.98011.00780.8793
LVGI 0.9130.96011.1992.20862.1122.0461.25620.92470.93121.0164
TATA -0.0055-0.0167-0.0205-0.0165-0.0386-0.0561-0.0655-0.0681-0.0743-0.1197
M-score -1.88-2.31-2.31-2.34-2.63-2.18-2.87-2.21-2.55-1.86
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