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Freeport-McMoRan Inc (NYSE:FCX)
Beneish M-Score
-5.35 (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 -5.35 suggests that the company is not a manipulator.

FCX' s Beneish M-Score Range Over the Past 10 Years
Min: -5.83   Max: 2.23
Current: -5.35

-5.83
2.23

During the past 13 years, the highest Beneish M-Score of Freeport-McMoRan Inc was 2.23. The lowest was -5.83. And the median was -2.63.


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 * 0.4648+0.528 * 0.3673+0.404 * 1.2141+0.892 * 0.7537+0.115 * 0.8094
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.2577+4.679 * -0.3791-0.327 * 1.2151
=-5.35

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $796 Mil.
Revenue was 3334 + 3527 + 3795 + 3681 = $14,337 Mil.
Gross Profit was -545 + -3707 + -3917 + -3752 = $-11,921 Mil.
Total Current Assets was $10,700 Mil.
Total Assets was $41,296 Mil.
Property, Plant and Equipment(Net PPE) was $26,646 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,042 Mil.
Selling, General & Admin. Expense(SGA) was $564 Mil.
Total Current Liabilities was $4,540 Mil.
Long-Term Debt was $18,549 Mil.
Net Income was -479 + -4173 + -4071 + -3819 = $-12,542 Mil.
Non Operating Income was 64 + 38 + 2 + -40 = $64 Mil.
Cash Flow from Operations was 874 + 740 + 612 + 822 = $3,048 Mil.
Accounts Receivable was $2,272 Mil.
Revenue was 3938 + 4153 + 5235 + 5696 = $19,022 Mil.
Gross Profit was -2232 + -2802 + -2066 + 1291 = $-5,809 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 $595 Mil.
Total Current Liabilities was $4,739 Mil.
Long-Term Debt was $20,111 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)
=(796 / 14337) / (2272 / 19022)
=0.05552068 / 0.11944065
=0.4648

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)
=(-5809 / 19022) / (-11921 / 14337)
=-0.30538324 / -0.83148497
=0.3673

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 - (10700 + 26646) / 41296) / (1 - (8697 + 41056) / 54008)
=0.09565091 / 0.07878462
=1.2141

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
=14337 / 19022
=0.7537

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))
=(3713 / (3713 + 41056)) / (3042 / (3042 + 26646))
=0.08293685 / 0.10246564
=0.8094

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)
=(564 / 14337) / (595 / 19022)
=0.03933877 / 0.03127957
=1.2577

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)
=((18549 + 4540) / 41296) / ((20111 + 4739) / 54008)
=0.55910984 / 0.46011702
=1.2151

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
=(-12542 - 64 - 3048) / 41296
=-0.3791

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 -5.35 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.50980.86380.46583.27611.1080.41881.29021.34720.64870.939
GMI 1.07871.32821.56320.58980.90621.06141.33211.19213.3295-0.1133
AQI 0.32848.56240.40781.00441.02730.62911.98620.82190.73331.3749
SGI 1.38572.92511.05060.84511.26211.10.86251.16161.02470.7406
DEPI 1.11021.44360.46271.59571.12851.20350.90870.95410.71190.8527
SGAI 1.08941.01470.54951.4120.94040.99021.20411.31230.87931.2978
LVGI 0.70930.89641.64550.80280.79850.70420.96012.0461.0121.2888
TATA -0.082-0.0816-0.6176-0.0595-0.0627-0.0639-0.0167-0.0558-0.1194-0.3311
M-score -3.112.04-5.95-0.96-2.39-3.22-1.87-2.65-2.23-4.92

Freeport-McMoRan Inc Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 1.13351.15830.9160.64871.04310.97691.07080.95770.5520.4648
GMI 1.19391.04751.10593.3295-2.7108-0.9513-0.4207-0.11060.11460.3673
AQI 1.89441.54211.52640.73330.76040.77320.86671.37491.43011.2141
SGI 1.18541.26721.12991.02470.96640.84330.770.72610.72510.7537
DEPI 0.74410.38740.54880.71190.81370.92330.85280.85270.8520.8094
SGAI 1.30180.98011.00780.87930.93121.07391.1091.31671.2461.2577
LVGI 1.25510.92470.93121.0121.09441.17481.28551.28881.30871.2151
TATA -0.0645-0.0675-0.0737-0.1194-0.1691-0.2138-0.2918-0.3313-0.403-0.3791
M-score -2.19-2.21-2.55-2.23-5.36-4.84-4.92-4.91-5.48-5.35
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