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Houston American Energy Corp (AMEX:HUSA)
Beneish M-Score
36.69 (As of Today)

Warning Sign:

Beneish M-Score 36.69 higher than -2.22, which implies that it might have manipulated its financial results.

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.

Houston American Energy Corp has a M-score of 36.69 signals that the company is a manipulator.

HUSA' s 10-Year Beneish M-Score Range
Min: -36.47   Max: 669.62
Current: 36.69

-36.47
669.62

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 -1.98.


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 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 * 51.5355+0.528 * -0.1216+0.404 * 0.968+0.892 * 1.636+0.115 * 0.3277
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.3807+4.679 * -0.037-0.327 * 22.8315
=36.69

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $7.34 Mil.
Revenue was 0.057 + 0.067 + 0.106 + 0.143 = $0.37 Mil.
Gross Profit was 0.032 + 0.045 + 0.079 + 0.113 = $0.27 Mil.
Total Current Assets was $12.57 Mil.
Total Assets was $18.93 Mil.
Property, Plant and Equipment(Net PPE) was $6.36 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.14 Mil.
Selling, General & Admin. Expense(SGA) was $2.35 Mil.
Total Current Liabilities was $7.04 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was -0.512 + -0.684 + -0.535 + -0.575 = $-2.31 Mil.
Non Operating Income was 0 + 0 + 0 + 0.018 = $0.02 Mil.
Cash Flow from Operations was -0.359 + -0.42 + -0.701 + -0.143 = $-1.62 Mil.
Accounts Receivable was $0.09 Mil.
Revenue was 0.17 + 0.019 + 0.015 + 0.024 = $0.23 Mil.
Gross Profit was 0.138 + 0.008 + 0.006 + -0.172 = $-0.02 Mil.
Total Current Assets was $10.70 Mil.
Total Assets was $13.74 Mil.
Property, Plant and Equipment(Net PPE) was $3.04 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.02 Mil.
Selling, General & Admin. Expense(SGA) was $3.78 Mil.
Total Current Liabilities was $0.22 Mil.
Long-Term Debt was $0.00 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)
=(7.335 / 0.373) / (0.087 / 0.228)
=19.66487936 / 0.38157895
=51.5355

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)
=(0.045 / 0.228) / (0.032 / 0.373)
=-0.0877193 / 0.72117962
=-0.1216

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 - (12.57 + 6.356) / 18.93) / (1 - (10.703 + 3.038) / 13.744)
=0.0002113 / 0.00021828
=0.968

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
=0.373 / 0.228
=1.636

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))
=(0.021 / (0.021 + 3.038)) / (0.136 / (0.136 + 6.356))
=0.00686499 / 0.02094886
=0.3277

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)
=(2.351 / 0.373) / (3.775 / 0.228)
=6.30294906 / 16.55701754
=0.3807

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 + 7.044) / 18.93) / ((0 + 0.224) / 13.744)
=0.37210777 / 0.01629802
=22.8315

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
=(-2.306 - 0.018 - -1.623) / 18.93
=-0.037

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 36.69 signals that the company is likely to 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 own currency.

Houston American Energy Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.99370.50291.14450.25627.58761.17580.1336235.7140.6622
GMI 0.88141.02151.08260.92251.64490.71272.23010.49710.6882
AQI 27.73280.00890.72361663.64230.71370.57081.03190.00151.5017
SGI 2.40271.12781.55392.13420.76412.40380.05930.35550.8443
DEPI 1.0820.73541.63670.19193.66580.627529.42280.68921.7501
SGAI 1.14171.38190.79040.91041.15380.714916.5392.85470.8051
LVGI 1.6280.03140.60943.76660.23316.43760.066641.53340.0676
TATA -0.1572-0.0791-0.0463-0.1317-0.0054-0.26010.0081-2.6837-0.2288
M-score 8.55-3.36-1.90667.924.10-4.38-2.51186.05-3.54

Houston American Energy Corp Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 7.89270.3615235.141810.11640.23410.76830.66380.0250.747251.5355
GMI 23.7708-1.74751.9932-0.2377-0.01693.96790.1716-1.4426-1.8493-0.1216
AQI 0.65480.95130.00150.00120.00290.00221.50171.24811.12920.9681
SGI 0.12750.24250.35640.07830.0860.30520.84224.13215.46071.636
DEPI 1.97031.3540.69961.92095.1071.94181.72421.39550.56580.3277
SGAI 8.96424.47082.846112.65128.93072.37120.80770.15850.11360.3807
LVGI 30.004955.71441.53340.88830.12940.07360.06760.15570.422.8315
TATA -1.8195-2.738-2.6837-2.0719-1.1144-0.7683-0.2288-0.2282-0.0638-0.037
M-score -4.29-36.47186.31-7.53-10.76-5.57-3.81-2.37-0.1936.69
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