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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 -0.98. The lowest was -3.82. And the median was -2.68.
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 * 1.3063||+||0.528 * 0.6592||+||0.404 * 0.9878||+||0.892 * 0.4233||+||0.115 * 0.8291|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8195||+||4.679 * -0.0668||-||0.327 * 0.9666|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $1,492 Mil.|
Revenue was 1935 + 1550 + 3076 + 2745 = $9,306 Mil.
Gross Profit was 1031 + 461 + 1845 + 1652 = $4,989 Mil.
Total Current Assets was $3,926 Mil.
Total Assets was $35,558 Mil.
Property, Plant and Equipment(Net PPE) was $27,298 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,697 Mil.
Selling, General & Admin. Expense(SGA) was $536 Mil.
Total Current Liabilities was $3,493 Mil.
Long-Term Debt was $5,888 Mil.
Net Income was -567 + -389 + -8 + 1008 = $44 Mil.
Non Operating Income was -385 + 0 + -731 + 57 = $-1,059 Mil.
Cash Flow from Operations was 714 + 362 + 1057 + 1346 = $3,479 Mil.
|Accounts Receivable was $2,698 Mil.
Revenue was 3583 + 2592 + 13101 + 2706 = $21,982 Mil.
Gross Profit was 2539 + 1552 + 2059 + 1619 = $7,769 Mil.
Total Current Assets was $8,767 Mil.
Total Assets was $41,071 Mil.
Property, Plant and Equipment(Net PPE) was $27,236 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,989 Mil.
Selling, General & Admin. Expense(SGA) was $1,545 Mil.
Total Current Liabilities was $5,257 Mil.
Long-Term Debt was $5,953 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)|
|=||(1492 / 9306)||/||(2698 / 21982)|
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)|
|=||(461 / 21982)||/||(1031 / 9306)|
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 - (3926 + 27298) / 35558)||/||(1 - (8767 + 27236) / 41071)|
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))|
|=||(2989 / (2989 + 27236))||/||(3697 / (3697 + 27298))|
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)|
|=||(536 / 9306)||/||(1545 / 21982)|
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)|
|=||((5888 + 3493) / 35558)||/||((5953 + 5257) / 41071)|
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|
|=||(44 - -1059||-||3479)||/||35558|
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 -3.19 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