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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 5 years, the highest Beneish M-Score of Mid-Con Energy Partners LP was -1.73. The lowest was -3.34. And the median was -2.54.
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 Mid-Con Energy Partners LP 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 * 0.7531||+||0.528 * 1.0062||+||0.404 * 2.4054||+||0.892 * 1.5772||+||0.115 * 1.4511|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.7412||+||4.679 * -0.0615||-||0.327 * 0.747|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $8.1 Mil.|
Revenue was 51.616 + 35.453 + 19.444 + 19.759 = $126.3 Mil.
Gross Profit was 42.03 + 26.759 + 11.355 + 13.712 = $93.9 Mil.
Total Current Assets was $42.2 Mil.
Total Assets was $454.6 Mil.
Property, Plant and Equipment(Net PPE) was $407.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $21.9 Mil.
Selling, General & Admin. Expense(SGA) was $14.3 Mil.
Total Current Liabilities was $8.0 Mil.
Long-Term Debt was $205.0 Mil.
Net Income was 0.082 + 17.002 + 3.847 + 1.561 = $22.5 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 10.884 + 14.121 + 13.609 + 11.85 = $50.5 Mil.
|Accounts Receivable was $6.8 Mil.
Revenue was 22.038 + 16.188 + 22.779 + 19.056 = $80.1 Mil.
Gross Profit was 16.384 + 10.413 + 18.161 + 14.92 = $59.9 Mil.
Total Current Assets was $8.7 Mil.
Total Assets was $190.1 Mil.
Property, Plant and Equipment(Net PPE) was $180.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.4 Mil.
Selling, General & Admin. Expense(SGA) was $12.2 Mil.
Total Current Liabilities was $7.2 Mil.
Long-Term Debt was $112.0 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)|
|=||(8.051 / 126.272)||/||(6.778 / 80.061)|
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)|
|=||(26.759 / 80.061)||/||(42.03 / 126.272)|
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 - (42.207 + 407.295) / 454.628)||/||(1 - (8.66 + 180.532) / 190.083)|
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))|
|=||(14.421 / (14.421 + 180.532))||/||(21.877 / (21.877 + 407.295))|
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)|
|=||(14.313 / 126.272)||/||(12.244 / 80.061)|
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)|
|=||((205 + 8.016) / 454.628)||/||((112 + 7.225) / 190.083)|
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|
|=||(22.492 - 0||-||50.464)||/||454.628|
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.
Mid-Con Energy Partners LP has a M-score of -1.73 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
Mid-Con Energy Partners LP Annual Data
Mid-Con Energy Partners LP Quarterly Data