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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 Houston American Energy Corp was 669.62. The lowest was -36.47. And the median was -2.08.
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 Houston American Energy 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 * 0.9812||+||0.528 * 1.1109||+||0.404 * 1.5676||+||0.892 * 0.8354||+||0.115 * 0.1066|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8506||+||4.679 * -0.3071||-||0.327 * 2.289|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $0.29 Mil.|
Revenue was 0.114 + 0.102 + 0.133 + 0.057 = $0.41 Mil.
Gross Profit was 0.083 + 0.073 + 0.094 + 0.032 = $0.28 Mil.
Total Current Assets was $3.28 Mil.
Total Assets was $7.97 Mil.
Property, Plant and Equipment(Net PPE) was $4.68 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.58 Mil.
Selling, General & Admin. Expense(SGA) was $1.80 Mil.
Total Current Liabilities was $0.17 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was -0.352 + -1.187 + -2.623 + -0.512 = $-4.67 Mil.
Non Operating Income was 0 + 0 + -0.4 + 0 = $-0.40 Mil.
Cash Flow from Operations was -0.515 + -0.685 + -0.268 + -0.359 = $-1.83 Mil.
|Accounts Receivable was $0.36 Mil.
Revenue was 0.067 + 0.106 + 0.143 + 0.17 = $0.49 Mil.
Gross Profit was 0.045 + 0.079 + 0.113 + 0.138 = $0.38 Mil.
Total Current Assets was $6.37 Mil.
Total Assets was $12.49 Mil.
Property, Plant and Equipment(Net PPE) was $6.12 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.07 Mil.
Selling, General & Admin. Expense(SGA) was $2.53 Mil.
Total Current Liabilities was $0.11 Mil.
Long-Term Debt was $0.00 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)|
|=||(0.291 / 0.406)||/||(0.355 / 0.486)|
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)|
|=||(0.073 / 0.486)||/||(0.083 / 0.406)|
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 - (3.283 + 4.681) / 7.967)||/||(1 - (6.368 + 6.118) / 12.489)|
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))|
|=||(0.073 / (0.073 + 6.118))||/||(0.582 / (0.582 + 4.681))|
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)|
|=||(1.8 / 0.406)||/||(2.533 / 0.486)|
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)|
|=||((0 + 0.165) / 7.967)||/||((0 + 0.113) / 12.489)|
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|
|=||(-4.674 - -0.4||-||-1.827)||/||7.967|
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.
Houston American Energy Corp has a M-score of -4.29 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
Houston American Energy Corp Annual Data
Houston American Energy Corp Quarterly Data