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Beneish M-Score 36.70 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 36.70 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of Houston American Energy Corp was 668.41. The lowest was -34.86. And the median was -2.06.
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 * -0.0973||+||0.404 * 0.968||+||0.892 * 1.636||+||0.115 * 0.3277|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.3803||+||4.679 * -0.037||-||0.327 * 22.8315|
|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 + -0.168 = $-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
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)|
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)|
|=||(0.045 / 0.228)||/||(0.032 / 0.373)|
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 - (12.57 + 6.356) / 18.93)||/||(1 - (10.703 + 3.038) / 13.744)|
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))|
|=||(0.021 / (0.021 + 3.038))||/||(0.136 / (0.136 + 6.356))|
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)||/||(3.779 / 0.228)|
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)|
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|
|=||(-2.306 - 0.018||-||-1.623)||/||18.93|
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 36.70 signals that the company is likely to 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