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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.
Marathon Oil Corp has a M-score of -2.90 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Marathon Oil Corp was 0.55. The lowest was -4.37. And the median was -2.67.
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 * 1.015||+||0.528 * 1.0556||+||0.404 * 0.9672||+||0.892 * 0.8877||+||0.115 * 0.9537|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1265||+||4.679 * -0.0744||-||0.327 * 0.9363|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $2,222 Mil.|
Revenue was 3529 + 3041 + 3914 + 3898 = $14,382 Mil.
Gross Profit was 2262 + 1877 + 2549 + 2703 = $9,391 Mil.
Total Current Assets was $4,787 Mil.
Total Assets was $36,151 Mil.
Property, Plant and Equipment(Net PPE) was $28,426 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,767 Mil.
Selling, General & Admin. Expense(SGA) was $705 Mil.
Total Current Liabilities was $4,314 Mil.
Long-Term Debt was $6,392 Mil.
Net Income was 1149 + 375 + 569 + 426 = $2,519 Mil.
Non Operating Income was 0 + -3 + 0 + 0 = $-3 Mil.
Cash Flow from Operations was 1470 + 1229 + 1645 + 868 = $5,212 Mil.
|Accounts Receivable was $2,466 Mil.
Revenue was 4020 + 4236 + 4161 + 3784 = $16,201 Mil.
Gross Profit was 2916 + 2995 + 2819 + 2437 = $11,167 Mil.
Total Current Assets was $3,777 Mil.
Total Assets was $35,109 Mil.
Property, Plant and Equipment(Net PPE) was $28,382 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,623 Mil.
Selling, General & Admin. Expense(SGA) was $705 Mil.
Total Current Liabilities was $4,629 Mil.
Long-Term Debt was $6,476 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)|
|=||(2222 / 14382)||/||(2466 / 16201)|
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)|
|=||(1877 / 16201)||/||(2262 / 14382)|
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 - (4787 + 28426) / 36151)||/||(1 - (3777 + 28382) / 35109)|
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))|
|=||(2623 / (2623 + 28382))||/||(2767 / (2767 + 28426))|
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)|
|=||(705 / 14382)||/||(705 / 16201)|
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)|
|=||((6392 + 4314) / 36151)||/||((6476 + 4629) / 35109)|
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|
|=||(2519 - -3||-||5212)||/||36151|
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 -2.90 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