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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 -1.92. The lowest was -3.59. 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 * 1.5066||+||0.528 * 1.2746||+||0.404 * 0.2632||+||0.892 * 0.7366||+||0.115 * 1.0797|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0115||+||4.679 * -0.2352||-||0.327 * 1.1687|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $940 Mil.|
Revenue was 1386 + 1196 + 1269 + 973 = $4,824 Mil.
Gross Profit was 416 + 526 + 509 + 329 = $1,780 Mil.
Total Current Assets was $4,276 Mil.
Total Assets was $28,621 Mil.
Property, Plant and Equipment(Net PPE) was $23,595 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,244 Mil.
Selling, General & Admin. Expense(SGA) was $415 Mil.
Total Current Liabilities was $2,251 Mil.
Long-Term Debt was $6,694 Mil.
Net Income was -4892 + -339 + -392 + -509 = $-6,132 Mil.
Non Operating Income was -135 + -80 + 0 + 20 = $-195 Mil.
Cash Flow from Operations was 326 + 332 + 197 + -60 = $795 Mil.
|Accounts Receivable was $847 Mil.
Revenue was 1387 + 1689 + 1935 + 1538 = $6,549 Mil.
Gross Profit was 535 + 796 + 1031 + 718 = $3,080 Mil.
Total Current Assets was $4,404 Mil.
Total Assets was $34,157 Mil.
Property, Plant and Equipment(Net PPE) was $26,352 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,955 Mil.
Selling, General & Admin. Expense(SGA) was $557 Mil.
Total Current Liabilities was $2,628 Mil.
Long-Term Debt was $6,506 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)|
|=||(940 / 4824)||/||(847 / 6549)|
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)|
|=||(3080 / 6549)||/||(1780 / 4824)|
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 - (4276 + 23595) / 28621)||/||(1 - (4404 + 26352) / 34157)|
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))|
|=||(3955 / (3955 + 26352))||/||(3244 / (3244 + 23595))|
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)|
|=||(415 / 4824)||/||(557 / 6549)|
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)|
|=||((6694 + 2251) / 28621)||/||((6506 + 2628) / 34157)|
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|
|=||(-6132 - -195||-||795)||/||28621|
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 -3.55 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