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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.
During the past 13 years, the highest Beneish M-Score of Hess Corp was -0.09. The lowest was -3.72. And the median was -2.72.
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 Hess Corp 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 * 0.8055||+||0.528 * 1.2391||+||0.404 * 1.0058||+||0.892 * 0.6177||+||0.115 * 0.796|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.7387||+||4.679 * -0.0709||-||0.327 * 0.9344|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $1,522 Mil.|
Revenue was 1671 + 1935 + 1550 + 3259 = $8,415 Mil.
Gross Profit was 807 + 1076 + 766 + 2265 = $4,914 Mil.
Total Current Assets was $5,597 Mil.
Total Assets was $36,456 Mil.
Property, Plant and Equipment(Net PPE) was $26,883 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,847 Mil.
Selling, General & Admin. Expense(SGA) was $581 Mil.
Total Current Liabilities was $2,624 Mil.
Long-Term Debt was $6,474 Mil.
Net Income was -279 + -567 + -389 + -8 = $-1,243 Mil.
Non Operating Income was 18 + -385 + 0 + -731 = $-1,098 Mil.
Cash Flow from Operations was 282 + 714 + 362 + 1081 = $2,439 Mil.
|Accounts Receivable was $3,059 Mil.
Revenue was 2678 + 3583 + 2592 + 4771 = $13,624 Mil.
Gross Profit was 1744 + 2617 + 1733 + 3764 = $9,858 Mil.
Total Current Assets was $8,865 Mil.
Total Assets was $40,975 Mil.
Property, Plant and Equipment(Net PPE) was $27,667 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,062 Mil.
Selling, General & Admin. Expense(SGA) was $541 Mil.
Total Current Liabilities was $5,015 Mil.
Long-Term Debt was $5,929 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(1522 / 8415)||/||(3059 / 13624)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(1076 / 13624)||/||(807 / 8415)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (5597 + 26883) / 36456)||/||(1 - (8865 + 27667) / 40975)|
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.
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))|
|=||(3062 / (3062 + 27667))||/||(3847 / (3847 + 26883))|
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)|
|=||(581 / 8415)||/||(541 / 13624)|
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)|
|=||((6474 + 2624) / 36456)||/||((5929 + 5015) / 40975)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(-1243 - -1098||-||2439)||/||36456|
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.
Hess Corp has a M-score of -3.33 suggests that the company will not be a manipulator.
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
Hess Corp Annual Data
Hess Corp Quarterly Data