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Beneish M-Score 0.57 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 0.57 signals that the company is a manipulator.
During the past 13 years, the highest Beneish M-Score of InterOil Corp was 559.41. The lowest was -8.62. And the median was -2.12.
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 * 0.6431||+||0.404 * 0.3994||+||0.892 * 2.4478||+||0.115 * 0.4442|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8245||+||4.679 * 0.0296||-||0.327 * 0.3527|
|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 + 16.41 = $53 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
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)|
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)|
|=||(13.689 / 708.218)||/||(10.749 / 1733.595)|
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 - (1031.583 + 258.276) / 1337.452)||/||(1 - (335.778 + 814.791) / 1263.11)|
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))|
|=||(23.977 / (23.977 + 814.791))||/||(17.765 / (17.765 + 258.276))|
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)||/||(36.217 / 708.218)|
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)|
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|
|=||(329.158 - 289.396||-||0.238)||/||1337.452|
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 0.57 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
InterOil Corp Annual Data
InterOil Corp Quarterly Data