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Beneish M-Score 0.48 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 951.68. The lowest was -10.92. And the median was -1.32.
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 (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $602.82 Mil.|
Revenue was 11.822 + -13.643 + 13.215 + -13.182 = $-1.79 Mil.
Gross Profit was 11.822 + -13.643 + 13.215 + -13.182 = $-1.79 Mil.
Total Current Assets was $731.96 Mil.
Total Assets was $1,231.92 Mil.
Property, Plant and Equipment(Net PPE) was $470.03 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.73 Mil.
Selling, General & Admin. Expense(SGA) was $36.74 Mil.
Total Current Liabilities was $258.76 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was -103.725 + -32.531 + -21.869 + -64.206 = $-222.33 Mil.
Non Operating Income was -2.569 + -1.099 + -5.98 + -19.606 = $-29.25 Mil.
Cash Flow from Operations was -16.7 + -11.072 + -33.353 + -20.301 = $-81.43 Mil.
|Accounts Receivable was $577.34 Mil.
Revenue was 10.749 + 13.689 + 1.903 + 0.712 = $27.05 Mil.
Gross Profit was 10.749 + 13.689 + 1.903 + 0.712 = $27.05 Mil.
Total Current Assets was $1,031.58 Mil.
Total Assets was $1,337.45 Mil.
Property, Plant and Equipment(Net PPE) was $258.28 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.77 Mil.
Selling, General & Admin. Expense(SGA) was $47.66 Mil.
Total Current Liabilities was $83.43 Mil.
Long-Term Debt was $65.52 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)|
|=||(602.818 / -1.788)||/||(577.336 / 27.053)|
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)|
|=||(-13.643 / 27.053)||/||(11.822 / -1.788)|
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 - (731.96 + 470.027) / 1231.923)||/||(1 - (1031.583 + 258.276) / 1337.452)|
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))|
|=||(17.765 / (17.765 + 258.276))||/||(0.728 / (0.728 + 470.027))|
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)|
|=||(36.743 / -1.788)||/||(47.66 / 27.053)|
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 + 258.756) / 1231.923)||/||((65.521 + 83.431) / 1337.452)|
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|
|=||(-222.331 - -29.254||-||-81.426)||/||1231.923|
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