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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 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.
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|
|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
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)|
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)|
|=||(3160 / 5861)||/||(2544 / 4650)|
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 - (3665 + 25718) / 31094)||/||(1 - (2590 + 27061) / 32311)|
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))|
|=||(2957 / (2957 + 27061))||/||(2395 / (2395 + 25718))|
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)|
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)|
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|
|=||(-2140 - 17||-||1073)||/||31094|
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.
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
Marathon Oil Corp Annual Data
Marathon Oil Corp Quarterly Data