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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 -1.10. The lowest was -3.76. And the median was -2.74.
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 * 1.438||+||0.528 * 1.1792||+||0.404 * 0.887||+||0.892 * 0.4909||+||0.115 * 0.8037|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.3318||+||4.679 * -0.0979||-||0.327 * 0.9608|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $1,159 Mil.|
Revenue was 1474 + 1671 + 1953 + 1538 = $6,636 Mil.
Gross Profit was 622 + 778 + 1049 + 449 = $2,898 Mil.
Total Current Assets was $4,404 Mil.
Total Assets was $34,195 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 $6,544 Mil.
Net Income was -1821 + -279 + -567 + -389 = $-3,056 Mil.
Non Operating Income was -1318 + 18 + -403 + 12 = $-1,691 Mil.
Cash Flow from Operations was 623 + 282 + 714 + 362 = $1,981 Mil.
|Accounts Receivable was $1,642 Mil.
Revenue was 2374 + 2745 + 2846 + 5554 = $13,519 Mil.
Gross Profit was 1983 + 1652 + 1342 + 1985 = $6,962 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.
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)|
|=||(1159 / 6636)||/||(1642 / 13519)|
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)|
|=||(778 / 13519)||/||(622 / 6636)|
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 - (4404 + 26352) / 34195)||/||(1 - (6687 + 27517) / 38578)|
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))|
|=||(3224 / (3224 + 27517))||/||(3955 / (3955 + 26352))|
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)|
|=||(557 / 6636)||/||(852 / 13519)|
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)|
|=||((6544 + 2628) / 34195)||/||((5919 + 4851) / 38578)|
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|
|=||(-3056 - -1691||-||1981)||/||34195|
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 -3.01 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