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Freeport-McMoRan Inc (NYSE:FCX)
Beneish M-Score
-2.55 (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 -2.55 suggests that the company is not a manipulator.

FCX' s 10-Year Beneish M-Score Range
Min: -5.86   Max: 2.23
Current: -2.55

-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 -2.56.


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 * 0.916+0.528 * 1.1059+0.404 * 1.5264+0.892 * 1.1299+0.115 * 0.5488
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0078+4.679 * -0.074-0.327 * 0.9312
=-2.55

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $2,307 Mil.
Revenue was 5696 + 5522 + 4985 + 5885 = $22,088 Mil.
Gross Profit was 1291 + 1427 + 1282 + 1930 = $5,930 Mil.
Total Current Assets was $9,031 Mil.
Total Assets was $63,976 Mil.
Property, Plant and Equipment(Net PPE) was $48,641 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,943 Mil.
Selling, General & Admin. Expense(SGA) was $657 Mil.
Total Current Liabilities was $6,343 Mil.
Long-Term Debt was $17,975 Mil.
Net Income was 562 + 492 + 520 + 695 = $2,269 Mil.
Non Operating Income was 81 + -3 + 33 + -16 = $95 Mil.
Cash Flow from Operations was 1926 + 1386 + 1201 + 2396 = $6,909 Mil.
Accounts Receivable was $2,229 Mil.
Revenue was 6165 + 4288 + 4583 + 4513 = $19,549 Mil.
Gross Profit was 1914 + 905 + 1535 + 1450 = $5,804 Mil.
Total Current Assets was $9,606 Mil.
Total Assets was $62,598 Mil.
Property, Plant and Equipment(Net PPE) was $48,951 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,101 Mil.
Selling, General & Admin. Expense(SGA) was $577 Mil.
Total Current Liabilities was $4,498 Mil.
Long-Term Debt was $21,053 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)
=(2307 / 22088) / (2229 / 19549)
=0.10444585 / 0.11402118
=0.916

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)
=(1427 / 19549) / (1291 / 22088)
=0.29689498 / 0.26847157
=1.1059

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 - (9031 + 48641) / 63976) / (1 - (9606 + 48951) / 62598)
=0.09853695 / 0.06455478
=1.5264

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
=22088 / 19549
=1.1299

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))
=(2101 / (2101 + 48951)) / (3943 / (3943 + 48641))
=0.04115412 / 0.07498479
=0.5488

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 / 22088) / (577 / 19549)
=0.02974466 / 0.02951558
=1.0078

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)
=((17975 + 6343) / 63976) / ((21053 + 4498) / 62598)
=0.38011129 / 0.40817598
=0.9312

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
=(2269 - 95 - 6909) / 63976
=-0.074

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 -2.55 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 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 0.89021.45631.29021.35341.47991.20861.54641.13351.15830.916
GMI 1.34841.42531.33211.31331.30861.241.19211.19391.04751.1059
AQI 1.34681.39041.98620.89941.08481.02590.82191.89441.54211.5264
SGI 0.82760.79110.86250.90960.96551.1071.16161.18541.26721.1299
DEPI 1.05631.01310.90870.97761.61641.17080.95410.74410.38740.5488
SGAI 1.17561.1931.20411.19441.38711.29331.31231.30180.98011.0078
LVGI 0.88280.9130.96011.1992.20862.1122.0461.25510.92470.9312
TATA -0.039-0.0055-0.0167-0.0205-0.0164-0.0384-0.0561-0.0648-0.0678-0.074
M-score -2.58-1.89-1.87-2.31-2.34-2.63-2.47-2.20-2.21-2.55
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