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GuruFocus has detected 2 Warning Signs with Marathon Oil Corp $MRO.
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Marathon Oil Corp (NYSE:MRO)
Beneish M-Score
-3.09 (As of Today)

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.

Marathon Oil Corp has a M-score of -3.09 suggests that the company is not a manipulator.

MRO' s Beneish M-Score Range Over the Past 10 Years
Min: -4.01   Max: -2.06
Current: -3.09

-4.01
-2.06

During the past 13 years, the highest Beneish M-Score of Marathon Oil Corp was -2.06. The lowest was -4.01. And the median was -2.57.


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 Marathon Oil 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 * 1.2121+0.528 * 0.9855+0.404 * 0.6684+0.892 * 0.7934+0.115 * 1.1563
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.034+4.679 * -0.1039-0.327 * 1.0188
=-3.09

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $877 Mil.
Revenue was 1389 + 1229 + 1302 + 730 = $4,650 Mil.
Gross Profit was 875 + 665 + 769 + 235 = $2,544 Mil.
Total Current Assets was $3,665 Mil.
Total Assets was $31,094 Mil.
Property, Plant and Equipment(Net PPE) was $25,718 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,395 Mil.
Selling, General & Admin. Expense(SGA) was $484 Mil.
Total Current Liabilities was $2,240 Mil.
Long-Term Debt was $6,589 Mil.
Net Income was -1371 + -192 + -170 + -407 = $-2,140 Mil.
Non Operating Income was 17 + 0 + 0 + 0 = $17 Mil.
Cash Flow from Operations was 455 + 366 + 178 + 74 = $1,073 Mil.
Accounts Receivable was $912 Mil.
Revenue was 1475 + 1323 + 1531 + 1532 = $5,861 Mil.
Gross Profit was 826 + 740 + 818 + 776 = $3,160 Mil.
Total Current Assets was $2,590 Mil.
Total Assets was $32,311 Mil.
Property, Plant and Equipment(Net PPE) was $27,061 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,957 Mil.
Selling, General & Admin. Expense(SGA) was $590 Mil.
Total Current Liabilities was $1,729 Mil.
Long-Term Debt was $7,276 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)
=(877 / 4650) / (912 / 5861)
=0.18860215 / 0.15560485
=1.2121

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)
=(3160 / 5861) / (2544 / 4650)
=0.53915714 / 0.54709677
=0.9855

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 - (3665 + 25718) / 31094) / (1 - (2590 + 27061) / 32311)
=0.05502669 / 0.0823249
=0.6684

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
=4650 / 5861
=0.7934

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))
=(2957 / (2957 + 27061)) / (2395 / (2395 + 25718))
=0.09850756 / 0.0851919
=1.1563

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)
=(484 / 4650) / (590 / 5861)
=0.10408602 / 0.10066542
=1.034

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)
=((6589 + 2240) / 31094) / ((7276 + 1729) / 32311)
=0.28394546 / 0.27869766
=1.0188

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
=(-2140 - 17 - 1073) / 31094
=-0.1039

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.

Marathon Oil Corp has a M-score of -3.09 suggests that the company will not 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 local exchange's currency.

Marathon Oil Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.35260.46352.17765.33550.27271.51610.93520.8481.01321.2121
GMI 1.11371.53321.07010.2371.05580.99490.96311.06171.06180.9855
AQI 1.32240.65150.80010.86831.13571.02991.36320.5171.26060.6684
SGI 0.99631.19820.69060.23861.18710.8170.94370.95540.52060.7934
DEPI 1.36150.90910.90011.25020.73121.2370.81290.90960.91041.1563
SGAI 1.12220.64761.32331.62941.13741.24791.0331.03871.73291.034
LVGI 1.12480.85681.06941.00640.77251.1360.91710.89271.03661.0188
TATA -0.0639-0.0762-0.0883-0.0642-0.105-0.0687-0.0992-0.0687-0.118-0.1039
M-score -2.29-2.92-2.22-0.01-3.37-2.54-2.93-3.13-3.46-3.09

Marathon Oil Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.75180.91310.69910.78660.79521.01321.14151.21491.14831.2121
GMI 0.99351.1051.05161.03581.05741.06181.08021.03831.02810.9855
AQI 0.83160.5170.87740.650.79861.26061.22151.36031.21990.6684
SGI 1.06330.88740.86320.7440.60850.52060.50890.56620.68810.7934
DEPI 0.84610.90960.83560.87510.84830.91041.00961.06541.16391.1563
SGAI 0.98241.10331.08211.35231.52731.73291.75561.41411.1821.034
LVGI 0.92440.89270.86391.00821.02221.03661.04720.91830.91641.0188
TATA -0.084-0.0687-0.0788-0.0834-0.0832-0.118-0.1129-0.1003-0.0798-0.1039
M-score -3.11-3.11-3.26-3.50-3.57-3.46-3.33-3.01-2.88-3.09
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