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InterOil Corp (NYSE:IOC)
Beneish M-Score
0.72 (As of Today)

Warning Sign:

Beneish M-Score 0.72 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.

InterOil Corp has a M-score of 0.72 signals that the company is a manipulator.

IOC' s 10-Year Beneish M-Score Range
Min: -10.9   Max: 559.41
Current: 0.72

-10.9
559.41

During the past 13 years, the highest Beneish M-Score of InterOil Corp was 559.41. The lowest was -10.90. And the median was -1.76.


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 InterOil 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 * 3.0349+0.528 * 0.9296+0.404 * 0.3994+0.892 * 2.4478+0.115 * 0.4442
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.82+4.679 * 0.0296-0.327 * 0.3527
=0.72

* 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 $577 Mil.
Revenue was 10.749 + 13.689 + 311.079 + 1398.078 = $1,734 Mil.
Gross Profit was 10.749 + 13.689 + 40.365 + 138.565 = $203 Mil.
Total Current Assets was $1,032 Mil.
Total Assets was $1,337 Mil.
Property, Plant and Equipment(Net PPE) was $258 Mil.
Depreciation, Depletion and Amortization(DDA) was $18 Mil.
Selling, General & Admin. Expense(SGA) was $73 Mil.
Total Current Liabilities was $83 Mil.
Long-Term Debt was $66 Mil.
Net Income was -16.931 + 52.266 + 318.636 + -24.813 = $329 Mil.
Non Operating Income was -0.535 + 3.504 + 327.162 + -40.735 = $289 Mil.
Cash Flow from Operations was -50.621 + 4.96 + -15.244 + 61.143 = $0 Mil.
Accounts Receivable was $78 Mil.
Revenue was 0.617 + 0.831 + 350.331 + 356.439 = $708 Mil.
Gross Profit was 0.617 + 0.831 + 35.572 + 40.21 = $77 Mil.
Total Current Assets was $336 Mil.
Total Assets was $1,263 Mil.
Property, Plant and Equipment(Net PPE) was $815 Mil.
Depreciation, Depletion and Amortization(DDA) was $24 Mil.
Selling, General & Admin. Expense(SGA) was $36 Mil.
Total Current Liabilities was $264 Mil.
Long-Term Debt was $135 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)
=(577.336 / 1733.595) / (77.715 / 708.218)
=0.33302819 / 0.10973316
=3.0349

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)
=(13.689 / 708.218) / (10.749 / 1733.595)
=0.10904834 / 0.11730998
=0.9296

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 - (1031.583 + 258.276) / 1337.452) / (1 - (335.778 + 814.791) / 1263.11)
=0.03558483 / 0.08909834
=0.3994

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
=1733.595 / 708.218
=2.4478

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))
=(23.976 / (23.976 + 814.791)) / (17.765 / (17.765 + 258.276))
=0.02858482 / 0.06435638
=0.4442

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)
=(73.095 / 1733.595) / (36.415 / 708.218)
=0.04216383 / 0.05141778
=0.82

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)
=((65.521 + 83.431) / 1337.452) / ((135.215 + 263.647) / 1263.11)
=0.11136998 / 0.31577772
=0.3527

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
=(329.158 - 289.396 - 0.238) / 1337.452
=0.0296

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.

InterOil Corp has a M-score of 0.72 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.

InterOil Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.12431.26190.76830.46551.89351.16160.93730.6936
GMI -16.04710.91920.46172.03850.25741.50021.14110.7643
AQI 0.79522.3350.48020.93978.40380.8871.53171.3294
SGI 6.84461.07141.21691.4590.75351.61451.18021.0603
DEPI 0.13991.05251.00181.051.10121.09831.15221.0106
SGAI 0.23421.25951.52610.63971.31370.66350.85531.0064
LVGI 0.98261.13240.96890.96230.47670.91961.43110.9666
TATA 0.0161-0.0348-0.0023-0.0653-0.0223-0.03980.0348-0.0584
M-score -7.04-1.92-3.08-2.260.75-1.66-2.02-2.96

InterOil Corp Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.79370.99120.93731.15951.40730.87130.5550.34450.06853.0349
GMI 104.12084.29891.98231.81160.01080.2210.44040.40641.010.9296
AQI 2.52552.55181.53171.51351.36281.81571.32944.96665.59320.3994
SGI 1.59911.51171.18021.09830.85580.56491.32511.28351.6662.4478
DEPI 0.740.83021.1521.21921.03281.01281.01080.41280.25220.4442
SGAI 0.7440.74040.85541.07941.20451.5310.88791.04840.88370.82
LVGI 1.3141.33971.43111.4791.03230.96410.96660.90740.34930.3527
TATA -0.0430.00140.0367-0.00940.02830.0085-0.0539-0.019-0.02480.0296
M-score 52.640.26-1.57-1.80-2.52-3.11-2.98-1.68-0.850.72
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