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Beneish M-Score 21.02 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.
During the past 13 years, the highest Beneish M-Score of InterOil Corp was 559.41. The lowest was -10.92. And the median was -1.33.
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 *||+||0.528 *||+||0.404 *||+||0.892 *||+||0.115 *|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 *||+||4.679 *||-||0.327 *|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $586.55 Mil.|
Revenue was -13.643 + 13.215 + -13.182 + 10.749 = $-2.86 Mil.
Gross Profit was -13.643 + 13.215 + -13.182 + 10.749 = $-2.86 Mil.
Total Current Assets was $790.14 Mil.
Total Assets was $1,302.41 Mil.
Property, Plant and Equipment(Net PPE) was $482.24 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.53 Mil.
Selling, General & Admin. Expense(SGA) was $43.56 Mil.
Total Current Liabilities was $227.23 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was -32.531 + -21.869 + -64.206 + -16.931 = $-135.54 Mil.
Non Operating Income was -1.099 + -5.98 + -36.232 + -0.535 = $-43.85 Mil.
Cash Flow from Operations was -11.072 + -33.353 + -20.301 + -50.621 = $-115.35 Mil.
|Accounts Receivable was $16.98 Mil.
Revenue was 13.689 + 1.903 + 0.712 + 0.617 = $16.92 Mil.
Gross Profit was 13.689 + 1.903 + 0.712 + 0.617 = $16.92 Mil.
Total Current Assets was $595.81 Mil.
Total Assets was $1,400.60 Mil.
Property, Plant and Equipment(Net PPE) was $179.24 Mil.
Depreciation, Depletion and Amortization(DDA) was $22.91 Mil.
Selling, General & Admin. Expense(SGA) was $39.77 Mil.
Total Current Liabilities was $92.61 Mil.
Long-Term Debt was $64.55 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)|
|=||(586.546 / -2.861)||/||(16.983 / 16.921)|
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)|
|=||(13.215 / 16.921)||/||(-13.643 / -2.861)|
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 - (790.138 + 482.244) / 1302.407)||/||(1 - (595.813 + 179.236) / 1400.601)|
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))|
|=||(22.905 / (22.905 + 179.236))||/||(1.532 / (1.532 + 482.244))|
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)|
|=||(43.557 / -2.861)||/||(39.772 / 16.921)|
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 + 227.233) / 1302.407)||/||((64.554 + 92.607) / 1400.601)|
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|
|=||(-135.537 - -43.846||-||-115.347)||/||1302.407|
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 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