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GuruFocus has detected 3 Warning Signs with Houston American Energy Corp $HUSA.
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Houston American Energy Corp (AMEX:HUSA)
Beneish M-Score
-6.30 (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.

Houston American Energy Corp has a M-score of -6.30 suggests that the company is not a manipulator.

HUSA' s Beneish M-Score Range Over the Past 10 Years
Min: -9.14   Max: 668.31
Current: -6.3

-9.14
668.31

During the past 13 years, the highest Beneish M-Score of Houston American Energy Corp was 668.31. The lowest was -9.14. And the median was -2.51.


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 * 0+0.528 * 1.5758+0.404 * 1.8879+0.892 * 0.3869+0.115 * 1.7778
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 3.069+4.679 * -0.4557-0.327 * 2.8791
=-6.30

* 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 $0.00 Mil.
Revenue was 0.044 + 0.04 + 0.034 + 0.048 = $0.17 Mil.
Gross Profit was 0.007 + 0.017 + 0.007 + 0.038 = $0.07 Mil.
Total Current Assets was $0.49 Mil.
Total Assets was $2.95 Mil.
Property, Plant and Equipment(Net PPE) was $2.46 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.30 Mil.
Selling, General & Admin. Expense(SGA) was $1.83 Mil.
Total Current Liabilities was $0.06 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was -1.441 + -0.37 + -0.49 + -0.339 = $-2.64 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.00 Mil.
Cash Flow from Operations was -0.274 + -0.31 + -0.419 + -0.295 = $-1.30 Mil.
Accounts Receivable was $0.26 Mil.
Revenue was 0.089 + 0.124 + 0.114 + 0.102 = $0.43 Mil.
Gross Profit was 0.053 + 0.072 + 0.083 + 0.073 = $0.28 Mil.
Total Current Assets was $2.42 Mil.
Total Assets was $5.56 Mil.
Property, Plant and Equipment(Net PPE) was $3.13 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.76 Mil.
Selling, General & Admin. Expense(SGA) was $1.54 Mil.
Total Current Liabilities was $0.04 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)
=(0 / 0.166) / (0.262 / 0.429)
=0 / 0.61072261
=0

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)
=(0.281 / 0.429) / (0.069 / 0.166)
=0.65501166 / 0.41566265
=1.5758

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 - (0.485 + 2.457) / 2.945) / (1 - (2.424 + 3.133) / 5.56)
=0.00101868 / 0.00053957
=1.8879

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
=0.166 / 0.429
=0.3869

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))
=(0.757 / (0.757 + 3.133)) / (0.302 / (0.302 + 2.457))
=0.19460154 / 0.10945995
=1.7778

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)
=(1.83 / 0.166) / (1.541 / 0.429)
=11.02409639 / 3.59207459
=3.069

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 + 0.061) / 2.945) / ((0 + 0.04) / 5.56)
=0.02071307 / 0.00719424
=2.8791

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
=(-2.64 - 0 - -1.298) / 2.945
=-0.4557

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 -6.30 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.

Houston American Energy Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.14450.25627.58761.17580.1336235.7140.66224.44570.02480
GMI 1.08260.92251.64490.71272.23010.49710.68821.10891.05141.5758
AQI 0.72361663.64230.71370.57081.03190.00151.50170.72053.34781.8879
SGI 1.55392.13420.76412.40380.05930.35550.84431.04611.18180.3869
DEPI 1.63670.19193.66580.627529.42280.68921.75010.10470.31571.7726
SGAI 0.79040.91041.15380.714916.5392.85470.80510.65940.55323.0707
LVGI 0.60943.76660.23316.43760.066641.53340.067629.17850.01442.8791
TATA -0.0631-0.0436-0.0054-0.26010.0081-2.6837-0.2288-0.1185-0.3408-0.4567
M-score -1.98668.334.10-4.38-2.51186.05-3.54-9.14-3.51-6.30

Houston American Energy Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 51.53554.445727.81040.98120.03310.02480.0311.23911.90690
GMI -0.12161.10891.13541.11091.05941.05141.03611.20531.2491.5758
AQI 0.96810.72050.79621.56761.27123.34783.19461.69692.59561.8879
SGI 1.6361.04610.81960.83541.26811.18181.04460.72660.44610.3869
DEPI 0.32770.10470.060.10660.16290.31570.5450.77141.13391.7778
SGAI 0.38070.65940.85280.85060.57560.55320.62591.25322.10583.069
LVGI 22.831529.178530.09712.2890.02850.01440.01340.33940.43812.8791
TATA -0.037-0.1185-0.1747-0.3071-0.3308-0.341-0.2793-0.3561-0.3632-0.4557
M-score 36.69-9.1411.60-4.29-4.24-3.51-3.40-3.63-3.05-6.30
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