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Freeport-McMoRan Inc (NYSE:FCX)
Beneish M-Score
-4.92 (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 -4.92 suggests that the company is not a manipulator.

FCX' s Beneish M-Score Range Over the Past 10 Years
Min: -29.37   Max: 2.43
Current: -4.92

-29.37
2.43

During the past 13 years, the highest Beneish M-Score of Freeport-McMoRan Inc was 2.43. The lowest was -29.37. And the median was -2.70.


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 * 1.0516+0.528 * -0.4306+0.404 * 0.8667+0.892 * 0.784+0.115 * 0.8528
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.095+4.679 * -0.2898-0.327 * 1.2855
=-4.92

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $1,902 Mil.
Revenue was 3681 + 4248 + 4153 + 5235 = $17,317 Mil.
Gross Profit was -3752 + -2176 + -2802 + -2066 = $-10,796 Mil.
Total Current Assets was $8,155 Mil.
Total Assets was $50,383 Mil.
Property, Plant and Equipment(Net PPE) was $37,925 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,656 Mil.
Selling, General & Admin. Expense(SGA) was $564 Mil.
Total Current Liabilities was $4,827 Mil.
Long-Term Debt was $19,792 Mil.
Net Income was -3819 + -1841 + -2464 + -2842 = $-10,966 Mil.
Non Operating Income was -40 + -55 + 7 + -2 = $-90 Mil.
Cash Flow from Operations was 822 + 1069 + 717 + 1118 = $3,726 Mil.
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.



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)
=(1902 / 17317) / (2307 / 22088)
=0.10983427 / 0.10444585
=1.0516

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)
=(-2176 / 22088) / (-3752 / 17317)
=0.26847157 / -0.62343362
=-0.4306

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 - (8155 + 37925) / 50383) / (1 - (9031 + 48641) / 63976)
=0.08540579 / 0.09853695
=0.8667

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
=17317 / 22088
=0.784

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))
=(3943 / (3943 + 48641)) / (3656 / (3656 + 37925))
=0.07498479 / 0.08792477
=0.8528

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 / 17317) / (657 / 22088)
=0.03256915 / 0.02974466
=1.095

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)
=((19792 + 4827) / 50383) / ((17975 + 6343) / 63976)
=0.48863704 / 0.38011129
=1.2855

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
=(-10966 - -90 - 3726) / 50383
=-0.2898

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 -4.92 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 0.50980.86380.46583.27611.1080.41881.29021.34720.64870.7497
GMI 1.07871.32821.56320.58980.90621.06141.33211.19213.3295-0.1133
AQI 0.32848.56240.40781.00441.02730.62911.98620.82190.75321.3385
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 0.70930.89641.64550.80280.79850.70420.96012.0461.01511.2848
TATA -0.0818-0.0816-0.6176-0.0595-0.0627-0.0639-0.0167-0.0558-0.1192-0.3311
M-score -3.112.04-5.95-0.96-2.39-3.22-1.87-2.65-2.23-5.10

Freeport-McMoRan Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1.20861.34721.13351.15830.9160.64871.04310.96121.05160.7497
GMI 1.241.19211.19391.04751.10593.3295-2.7108-0.9762-0.4306-0.1133
AQI 1.02590.82191.89441.54211.52640.75320.76040.77320.86671.3385
SGI 1.1071.16161.18541.26721.12991.02470.96640.8570.7840.7406
DEPI 1.17080.95410.74410.38740.54880.71190.81370.92330.85280.8527
SGAI 1.29331.31231.30180.98011.00780.87930.93121.0621.0951.2978
LVGI 2.1122.0461.25510.92470.93121.01511.09441.17481.28551.2848
TATA -0.0384-0.0558-0.0645-0.0675-0.0737-0.1192-0.1691-0.2119-0.2898-0.3291
M-score -2.63-2.65-2.19-2.21-2.55-2.23-5.36-4.85-4.92-5.09
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