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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.
During the past 13 years, the highest Beneish M-Score of InterOil Corp was 951.60. The lowest was -11.21. And the median was -1.35.
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 * 2.1882||+||0.528 * 1||+||0.404 * 0.9467||+||0.892 * 0.4409||+||0.115 * 12.6233|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 2.2809||+||4.679 * -0.0536||-||0.327 * 1.5946|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $564.51 Mil.|
Revenue was 0.921 + 11.689 + 11.822 + -13.643 = $10.79 Mil.
Gross Profit was 0.921 + 11.689 + 11.822 + -13.643 = $10.79 Mil.
Total Current Assets was $617.83 Mil.
Total Assets was $1,174.80 Mil.
Property, Plant and Equipment(Net PPE) was $531.63 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.72 Mil.
Selling, General & Admin. Expense(SGA) was $49.57 Mil.
Total Current Liabilities was $300.86 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was -16.978 + -83.83 + -103.725 + -32.531 = $-237.06 Mil.
Non Operating Income was -1.415 + -90.703 + -13.812 + 13.177 = $-92.75 Mil.
Cash Flow from Operations was -14.418 + -39.124 + -16.7 + -11.072 = $-81.31 Mil.
|Accounts Receivable was $585.14 Mil.
Revenue was 13.215 + -13.182 + 10.749 + 13.689 = $24.47 Mil.
Gross Profit was 13.215 + -13.182 + 10.749 + 13.689 = $24.47 Mil.
Total Current Assets was $893.87 Mil.
Total Assets was $1,318.12 Mil.
Property, Plant and Equipment(Net PPE) was $394.22 Mil.
Depreciation, Depletion and Amortization(DDA) was $6.80 Mil.
Selling, General & Admin. Expense(SGA) was $49.29 Mil.
Total Current Liabilities was $211.69 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)|
|=||(564.509 / 10.789)||/||(585.141 / 24.471)|
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)|
|=||(24.471 / 24.471)||/||(10.789 / 10.789)|
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 - (617.828 + 531.634) / 1174.8)||/||(1 - (893.873 + 394.218) / 1318.12)|
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))|
|=||(6.799 / (6.799 + 394.218))||/||(0.715 / (0.715 + 531.634))|
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)|
|=||(49.572 / 10.789)||/||(49.294 / 24.471)|
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 + 300.855) / 1174.8)||/||((0 + 211.685) / 1318.12)|
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|
|=||(-237.064 - -92.753||-||-81.314)||/||1174.8|
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 -1.24 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