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

Warning Sign:

Beneish M-Score 1.85 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 1.85 signals that the company is a manipulator.

IOC' s 10-Year Beneish M-Score Range
Min: -10.9   Max: 559.41
Current: 1.85

-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 -1.38.


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 * 6.0439+0.528 * 0.6684+0.404 * 0.2601+0.892 * 0.9144+0.115 * 0.7821
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.8952+4.679 * 0.0575-0.327 * 0.5263
=1.85

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $545.16 Mil.
Revenue was -13.182 + 10.749 + 13.689 + 311.079 = $322.34 Mil.
Gross Profit was -13.182 + 10.749 + 13.689 + 40.365 = $51.62 Mil.
Total Current Assets was $972.78 Mil.
Total Assets was $1,340.13 Mil.
Property, Plant and Equipment(Net PPE) was $337.31 Mil.
Depreciation, Depletion and Amortization(DDA) was $12.27 Mil.
Selling, General & Admin. Expense(SGA) was $58.90 Mil.
Total Current Liabilities was $215.48 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was -64.206 + -16.931 + 52.266 + 318.636 = $289.77 Mil.
Non Operating Income was -36.232 + -0.535 + 3.504 + 327.162 = $293.90 Mil.
Cash Flow from Operations was -20.301 + -50.621 + 4.96 + -15.244 = $-81.21 Mil.
Accounts Receivable was $98.64 Mil.
Revenue was 0.712 + 0.617 + 0.831 + 350.331 = $352.49 Mil.
Gross Profit was 0.712 + 0.617 + 0.831 + 35.572 = $37.73 Mil.
Total Current Assets was $364.05 Mil.
Total Assets was $1,305.80 Mil.
Property, Plant and Equipment(Net PPE) was $829.19 Mil.
Depreciation, Depletion and Amortization(DDA) was $23.41 Mil.
Selling, General & Admin. Expense(SGA) was $33.99 Mil.
Total Current Liabilities was $336.24 Mil.
Long-Term Debt was $62.66 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)
=(545.155 / 322.335) / (98.638 / 352.491)
=1.6912684 / 0.27983126
=6.0439

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)
=(10.749 / 352.491) / (-13.182 / 322.335)
=0.10704387 / 0.16014705
=0.6684

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 - (972.783 + 337.305) / 1340.13) / (1 - (364.053 + 829.191) / 1305.799)
=0.02241723 / 0.08619627
=0.2601

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
=322.335 / 352.491
=0.9144

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))
=(23.411 / (23.411 + 829.191)) / (12.273 / (12.273 + 337.305))
=0.0274583 / 0.03510804
=0.7821

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)
=(58.902 / 322.335) / (33.987 / 352.491)
=0.18273535 / 0.09641948
=1.8952

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 + 215.477) / 1340.13) / ((62.663 + 336.236) / 1305.799)
=0.16078813 / 0.3054827
=0.5263

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
=(289.765 - 293.899 - -81.206) / 1340.13
=0.0575

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 1.85 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.12431.26190.76830.46551.89351.1616151.14632.30371.16
GMI -16.04710.91920.46172.03850.25741.50020.087611
AQI 0.79522.3350.48020.93978.40380.8871.53171.32940.2601
SGI 6.84461.07141.21691.4590.75351.61450.00930.2654.7643
DEPI 0.13991.05251.00181.051.10121.09831.15221.01060.782
SGAI 0.23421.25951.52610.63971.31370.663552.03484.9740.3865
LVGI 0.98261.13240.96890.96230.47670.91961.16431.02020.5263
TATA 0.0161-0.0348-0.0023-0.0653-0.0223-0.03980.0352-0.08590.0464
M-score -7.04-1.92-3.08-2.260.75-1.66125.85-2.891.18

InterOil Corp Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.9912151.131868.360365.250852.93890.01810.03190.00780.25756.0439
GMI 4.2989-0.028-0.0519-0.0008-0.0161-29.2098-11.0257-8.8134-7.68190.6684
AQI 2.55181.53171.51351.36281.81571.32944.96665.69360.45360.2601
SGI 1.51170.00930.0186-0.2281-0.480133.815313.857114.425914.87410.9144
DEPI 0.83021.1521.21921.03281.01281.01080.41280.23110.40690.7821
SGAI 0.740452.048730.500527.248828.83980.04570.13710.14360.16341.8952
LVGI 1.33971.16431.4791.03230.96411.02020.90740.32770.32520.5263
TATA 0.00140.037-0.00910.02870.0089-0.0814-0.0396-0.05030.00280.0575
M-score 0.26125.7953.0250.7739.049.853.285.344.721.85
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