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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 -1.96. The lowest was -3.33. And the median was -2.79.
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 * 0.9215||+||0.528 * 0.6918||+||0.404 * 0.9003||+||0.892 * 0.6382||+||0.115 * 0.8374|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8471||+||4.679 * -0.0565||-||0.327 * 0.9965|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $2,073 Mil.|
Revenue was 3076 + 2745 + 2846 + 5554 = $14,221 Mil.
Gross Profit was 1845 + 1652 + 1342 + 1985 = $6,824 Mil.
Total Current Assets was $6,687 Mil.
Total Assets was $38,578 Mil.
Property, Plant and Equipment(Net PPE) was $27,517 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,224 Mil.
Selling, General & Admin. Expense(SGA) was $852 Mil.
Total Current Liabilities was $4,851 Mil.
Long-Term Debt was $5,919 Mil.
Net Income was -8 + 1008 + 931 + 386 = $2,317 Mil.
Non Operating Income was -731 + 57 + 754 + -48 = $32 Mil.
Cash Flow from Operations was 1057 + 1338 + 911 + 1158 = $4,464 Mil.
|Accounts Receivable was $3,525 Mil.
Revenue was 13101 + 2706 + 3011 + 3466 = $22,284 Mil.
Gross Profit was 2059 + 1619 + 1783 + 1936 = $7,397 Mil.
Total Current Assets was $8,599 Mil.
Total Assets was $42,754 Mil.
Property, Plant and Equipment(Net PPE) was $28,771 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,770 Mil.
Selling, General & Admin. Expense(SGA) was $1,576 Mil.
Total Current Liabilities was $6,558 Mil.
Long-Term Debt was $5,420 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)|
|=||(2073 / 14221)||/||(3525 / 22284)|
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)|
|=||(1652 / 22284)||/||(1845 / 14221)|
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 - (6687 + 27517) / 38578)||/||(1 - (8599 + 28771) / 42754)|
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))|
|=||(2770 / (2770 + 28771))||/||(3224 / (3224 + 27517))|
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)|
|=||(852 / 14221)||/||(1576 / 22284)|
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)|
|=||((5919 + 4851) / 38578)||/||((5420 + 6558) / 42754)|
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|
|=||(2317 - 32||-||4464)||/||38578|
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