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

Warning Sign:

Beneish M-Score 11.60 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 11.60 signals that the company is a manipulator.

HUSA' s 10-Year Beneish M-Score Range
Min: -36.47   Max: 669.62
Current: 11.6

-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 * 27.8104+0.528 * 1.1354+0.404 * 0.7962+0.892 * 0.8196+0.115 * 0.06
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8528+4.679 * -0.1747-0.327 * 30.0971
=11.60

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $8.09 Mil.
Revenue was 0.102 + 0.133 + 0.057 + 0.067 = $0.36 Mil.
Gross Profit was 0.073 + 0.094 + 0.032 + 0.045 = $0.24 Mil.
Total Current Assets was $11.73 Mil.
Total Assets was $16.45 Mil.
Property, Plant and Equipment(Net PPE) was $4.72 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.49 Mil.
Selling, General & Admin. Expense(SGA) was $2.20 Mil.
Total Current Liabilities was $8.32 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was -1.187 + -2.623 + -0.512 + -0.684 = $-5.01 Mil.
Non Operating Income was 0 + -0.4 + 0 + 0 = $-0.40 Mil.
Cash Flow from Operations was -0.685 + -0.268 + -0.359 + -0.42 = $-1.73 Mil.
Accounts Receivable was $0.36 Mil.
Revenue was 0.106 + 0.143 + 0.17 + 0.019 = $0.44 Mil.
Gross Profit was 0.079 + 0.113 + 0.138 + 0.008 = $0.34 Mil.
Total Current Assets was $8.29 Mil.
Total Assets was $13.10 Mil.
Property, Plant and Equipment(Net PPE) was $4.80 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.03 Mil.
Selling, General & Admin. Expense(SGA) was $3.15 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)
=(8.092 / 0.359) / (0.355 / 0.438)
=22.54038997 / 0.81050228
=27.8104

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)
=(0.094 / 0.438) / (0.073 / 0.359)
=0.7716895 / 0.67966574
=1.1354

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 - (11.73 + 4.716) / 16.449) / (1 - (8.293 + 4.801) / 13.097)
=0.00018238 / 0.00022906
=0.7962

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
=0.359 / 0.438
=0.8196

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))
=(0.027 / (0.027 + 4.801)) / (0.485 / (0.485 + 4.716))
=0.00559238 / 0.0932513
=0.06

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)
=(2.204 / 0.359) / (3.153 / 0.438)
=6.13927577 / 7.19863014
=0.8528

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 + 8.316) / 16.449) / ((0 + 0.22) / 13.097)
=0.50556265 / 0.01679774
=30.0971

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
=(-5.006 - -0.4 - -1.732) / 16.449
=-0.1747

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 11.60 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.99370.50291.14450.25627.58761.17580.1336235.7140.66224.4457
GMI 0.88141.02151.08260.92251.64490.71272.23010.49710.68821.1089
AQI 27.73280.00890.72361663.64230.71370.57081.03190.00151.50170.7205
SGI 2.40271.12781.55392.13420.76412.40380.05930.35550.84431.0461
DEPI 1.0820.73541.63670.19193.66580.627529.42280.68921.75010.1047
SGAI 1.14171.38190.79040.91041.15380.714916.5392.85470.80510.6594
LVGI 1.6280.03140.60943.76660.23316.43760.066641.53340.067629.1785
TATA -0.1572-0.0791-0.0463-0.1317-0.0054-0.26010.0081-2.6837-0.2288-0.1185
M-score 8.55-3.36-1.90667.924.10-4.38-2.51186.05-3.54-9.14

Houston American Energy Corp Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 235.141810.11640.23410.76830.66380.0250.747251.53554.445727.8104
GMI 1.9932-0.2377-0.01693.96790.1716-1.4426-1.8493-0.12161.10891.1354
AQI 0.00150.00120.00290.00221.50171.24811.12920.96810.72050.7962
SGI 0.35640.07830.0860.30520.84224.13215.46071.6361.04610.8196
DEPI 0.69961.92095.1071.94181.72421.39550.56580.32770.10470.06
SGAI 2.846112.65128.93072.37120.80770.15850.11360.38070.65940.8528
LVGI 41.53340.88830.12940.07360.06760.15570.422.831529.178530.0971
TATA -2.6837-2.0719-1.1144-0.7683-0.2288-0.2282-0.0638-0.037-0.1185-0.1747
M-score 186.31-7.53-10.76-5.57-3.81-2.37-0.1936.69-9.1411.60
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