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InterOil Corporation (NYSE:IOC)
Beneish M-Score
-3.07 (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.

InterOil Corporation has a M-score of -3.28 suggests that the company is not a manipulator.

IOC' s 10-Year Beneish M-Score Range
Min: -10.91   Max: 559.41
Current: -3.07

-10.91
559.41

During the past 13 years, the highest Beneish M-Score of InterOil Corporation was 559.41. The lowest was -10.91. And the median was -2.01.


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 Corporation 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 * 0.5758+0.528 * 0.3679+0.404 * 1.3294+0.892 * 1.0603+0.115 * 1.0108
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0062+4.679 * -0.0591-0.327 * 0.9666
=-3.28

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $99 Mil.
Revenue was 398.903 + 305.235 + 345.66 + 350.331 = $1,400 Mil.
Gross Profit was 48.631 + 31.052 + 66.029 + 22.464 = $168 Mil.
Total Current Assets was $364 Mil.
Total Assets was $1,306 Mil.
Property, Plant and Equipment(Net PPE) was $829 Mil.
Depreciation, Depletion and Amortization(DDA) was $23 Mil.
Selling, General & Admin. Expense(SGA) was $49 Mil.
Total Current Liabilities was $336 Mil.
Long-Term Debt was $128 Mil.
Net Income was -24.813 + -6.318 + -13.23 + 4.003 = $-40 Mil.
Non Operating Income was -12.857 + -7.172 + -8.451 + -5.412 = $-34 Mil.
Cash Flow from Operations was 61.143 + 26.14 + -57.224 + 40.583 = $71 Mil.
Accounts Receivable was $162 Mil.
Revenue was 356.439 + 326.865 + 299.104 + 338.15 = $1,321 Mil.
Gross Profit was 40.21 + 40.535 + -59.206 + 36.815 = $58 Mil.
Total Current Assets was $453 Mil.
Total Assets was $1,303 Mil.
Property, Plant and Equipment(Net PPE) was $766 Mil.
Depreciation, Depletion and Amortization(DDA) was $22 Mil.
Selling, General & Admin. Expense(SGA) was $46 Mil.
Total Current Liabilities was $331 Mil.
Long-Term Debt was $148 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)
=(98.638 / 1400.129) / (161.578 / 1320.558)
=0.07044922 / 0.12235585
=0.5758

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)
=(31.052 / 1320.558) / (48.631 / 1400.129)
=0.0441889 / 0.12011465
=0.3679

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 - (364.053 + 829.191) / 1305.799) / (1 - (453.095 + 765.701) / 1303.297)
=0.08619627 / 0.06483633
=1.3294

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
=1400.129 / 1320.558
=1.0603

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))
=(21.858 / (21.858 + 765.701)) / (23.411 / (23.411 + 829.191))
=0.02775411 / 0.0274583
=1.0108

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)
=(48.833 / 1400.129) / (45.773 / 1320.558)
=0.0348775 / 0.03466186
=1.0062

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)
=((128.344 + 336.236) / 1305.799) / ((148.493 + 331.211) / 1303.297)
=0.35578217 / 0.3680696
=0.9666

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
=(-40.358 - -33.892 - 70.642) / 1305.799
=-0.0591

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 Corporation has a M-score of -3.28 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 own currency.

InterOil Corporation Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.12431.26190.76830.80561.09411.39470.99360.5758
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 -7.04-1.92-3.08-1.950.01-1.44-1.97-3.07

InterOil Corporation Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.93271.53951.20280.79370.99120.99361.15951.05550.45450.5758
GMI 1.10981.4131.8299104.12084.29891.98232.35120.00990.20490.3679
AQI 0.50121.16882.64932.52552.55181.53171.51351.36281.81571.3294
SGI 1.0091.82651.79121.59911.51171.18021.09831.14111.08291.0603
DEPI 1.20690.6480.68950.740.83021.1521.21921.03281.01281.0108
SGAI 0.8240.75120.54150.7440.74040.85541.07941.01111.00421.0062
LVGI 0.81671.0970.92531.3141.33971.43111.4791.03230.96410.9666
TATA -0.0258-0.03360.0137-0.0430.00140.0367-0.00980.03330.0253-0.0591
M-score -1.76-1.15-0.3552.640.26-1.52-1.52-2.53-2.87-3.28
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