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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.
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.
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|
|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
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)|
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)|
|=||(10.749 / 352.491)||/||(-13.182 / 322.335)|
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 - (972.783 + 337.305) / 1340.13)||/||(1 - (364.053 + 829.191) / 1305.799)|
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))|
|=||(23.411 / (23.411 + 829.191))||/||(12.273 / (12.273 + 337.305))|
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)|
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)|
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|
|=||(289.765 - 293.899||-||-81.206)||/||1340.13|
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.
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