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GuruFocus has detected 7 Warning Signs with Huntsman Corp $HUN.
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Huntsman Corp (NYSE:HUN)
Beneish M-Score
-2.87 (As of Today)

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.

Huntsman Corp has a M-score of -2.87 suggests that the company is not a manipulator.

HUN' s Beneish M-Score Range Over the Past 10 Years
Min: -3.44   Max: -1.95
Current: -2.87

-3.44
-1.95

During the past 13 years, the highest Beneish M-Score of Huntsman Corp was -1.95. The lowest was -3.44. And the median was -2.74.


Definition

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 Huntsman 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 * 1.0562+0.528 * 1.0327+0.404 * 0.9868+0.892 * 0.9377+0.115 * 0.8853
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0187+4.679 * -0.0833-0.327 * 0.9659
=-2.87

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $1,435 Mil.
Revenue was 2395 + 2363 + 2544 + 2355 = $9,657 Mil.
Gross Profit was 407 + 398 + 457 + 416 = $1,678 Mil.
Total Current Assets was $3,555 Mil.
Total Assets was $9,189 Mil.
Property, Plant and Equipment(Net PPE) was $4,212 Mil.
Depreciation, Depletion and Amortization(DDA) was $432 Mil.
Selling, General & Admin. Expense(SGA) was $938 Mil.
Total Current Liabilities was $1,778 Mil.
Long-Term Debt was $4,136 Mil.
Net Income was 128 + 55 + 87 + 56 = $326 Mil.
Non Operating Income was 2 + -2 + 1 + 2 = $3 Mil.
Cash Flow from Operations was 240 + 405 + 355 + 88 = $1,088 Mil.
Accounts Receivable was $1,449 Mil.
Revenue was 2332 + 2638 + 2740 + 2589 = $10,299 Mil.
Gross Profit was 376 + 473 + 549 + 450 = $1,848 Mil.
Total Current Assets was $3,834 Mil.
Total Assets was $9,820 Mil.
Property, Plant and Equipment(Net PPE) was $4,446 Mil.
Depreciation, Depletion and Amortization(DDA) was $399 Mil.
Selling, General & Admin. Expense(SGA) was $982 Mil.
Total Current Liabilities was $1,917 Mil.
Long-Term Debt was $4,626 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(1435 / 9657) / (1449 / 10299)
=0.14859687 / 0.14069327
=1.0562

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(1848 / 10299) / (1678 / 9657)
=0.1794349 / 0.17375997
=1.0327

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (3555 + 4212) / 9189) / (1 - (3834 + 4446) / 9820)
=0.15475024 / 0.15682281
=0.9868

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=9657 / 10299
=0.9377

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))
=(399 / (399 + 4446)) / (432 / (432 + 4212))
=0.08235294 / 0.09302326
=0.8853

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)
=(938 / 9657) / (982 / 10299)
=0.09713161 / 0.09534906
=1.0187

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)
=((4136 + 1778) / 9189) / ((4626 + 1917) / 9820)
=0.6435956 / 0.66629328
=0.9659

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(326 - 3 - 1088) / 9189
=-0.0833

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.

Huntsman Corp has a M-score of -2.87 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Huntsman Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.91140.68351.48741.20270.85221.00630.69381.12121.3191.0562
GMI 1.0211.28960.87980.89040.96320.90191.14910.95460.92371.0327
AQI 1.2840.90570.77511.12360.99560.91271.14231.01991.17250.9868
SGI 1.10541.05840.75041.20681.21310.9970.99031.0450.88950.9377
DEPI 1.04061.00560.88071.10570.93431.04520.98621.14721.110.8853
SGAI 1.03580.95671.28430.83940.88181.03571.00020.98941.13341.0187
LVGI 1.02470.97790.98871.00530.98460.98061.0021.04341.01190.9659
TATA 0.0122-0.1148-0.20680.0282-0.014-0.0382-0.0587-0.0378-0.0466-0.0833
M-score -2.29-3.13-3.44-1.95-2.49-2.74-2.91-2.52-2.49-2.87

Huntsman Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.65021.12121.91871.42771.50971.3191.06861.01621.02231.0562
GMI 0.92920.95460.99040.96110.9610.92370.9331.00771.02491.0327
AQI 1.01051.01991.14961.21291.21731.17251.06481.02441.06830.9868
SGI 1.03081.0451.02520.98880.96350.88950.8820.8840.87870.9377
DEPI 0.94541.14721.21961.31091.29211.111.07070.97910.94690.8853
SGAI 0.94020.98941.02291.05361.09941.13341.09721.07221.06071.0187
LVGI 0.99411.04341.07491.05611.06011.01190.97270.97840.9730.9659
TATA -0.0269-0.0378-0.0519-0.0685-0.0679-0.0466-0.0473-0.0652-0.0864-0.0833
M-score -2.93-2.52-1.80-2.34-2.30-2.49-2.75-2.87-2.94-2.87
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