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Freeport-McMoRan Inc (NYSE:FCX)
Beneish M-Score
-2.21 (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 -2.21 signals that the company is a manipulator.

FCX' s 10-Year Beneish M-Score Range
Min: -5.86   Max: 2.23
Current: -2.21

-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 * 1.1583+0.528 * 1.0475+0.404 * 1.5421+0.892 * 1.2672+0.115 * 0.3874
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9801+4.679 * -0.0681-0.327 * 0.9247
=-2.21

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
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.
Net Income was 482 + 510 + 707 + 821 = $2,520 Mil.
Non Operating Income was -3 + 33 + -16 + 3 = $17 Mil.
Cash Flow from Operations was 1350 + 1237 + 2396 + 1878 = $6,861 Mil.
Accounts Receivable was $1,879 Mil.
Revenue was 4288 + 4583 + 4513 + 4417 = $17,801 Mil.
Gross Profit was 905 + 1535 + 1450 + 1527 = $5,417 Mil.
Total Current Assets was $10,578 Mil.
Total Assets was $63,157 Mil.
Property, Plant and Equipment(Net PPE) was $48,406 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,480 Mil.
Selling, General & Admin. Expense(SGA) was $529 Mil.
Total Current Liabilities was $5,610 Mil.
Long-Term Debt was $21,142 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)
=(2758 / 22557) / (1879 / 17801)
=0.12226803 / 0.10555587
=1.1583

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)
=(1282 / 17801) / (1427 / 22557)
=0.30430875 / 0.29050849
=1.0475

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 - (10254 + 47233) / 64009) / (1 - (10578 + 48406) / 63157)
=0.10189192 / 0.06607344
=1.5421

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
=22557 / 17801
=1.2672

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))
=(1480 / (1480 + 48406)) / (3917 / (3917 + 47233))
=0.02966764 / 0.07657869
=0.3874

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 / 22557) / (529 / 17801)
=0.02912621 / 0.02971743
=0.9801

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)
=((17512 + 7558) / 64009) / ((21142 + 5610) / 63157)
=0.39166367 / 0.42357933
=0.9247

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 - 17 - 6861) / 64009
=-0.0681

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 -2.21 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.68431.10070.50980.86380.46583.27611.1080.41881.29021.5464
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 -1.75-2.30-3.112.04-5.95-1.17-2.34-2.96-1.87-2.47

Freeport-McMoRan Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.89021.45631.29021.35341.47991.20861.54640.72061.15830.916
GMI 1.34841.42531.33211.31331.30861.241.19211.19391.04751.1059
AQI 1.34681.39041.98620.89941.08481.02590.82191.15591.54211.5264
SGI 0.82760.79110.86250.90960.96551.1071.16161.18541.26721.1299
DEPI 1.05631.01310.90870.97761.61641.17080.95410.77980.38740.5488
SGAI 1.17561.1931.20411.19441.38711.29331.31231.30180.98011.0078
LVGI 0.88280.9130.96011.1992.20862.1122.0461.25620.92470.9312
TATA -0.039-0.0055-0.0167-0.0205-0.0164-0.0385-0.0561-0.0655-0.0681-0.0743
M-score -2.58-1.89-1.87-2.31-2.34-2.63-2.47-2.87-2.21-2.55
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