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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 0.55. The lowest was -4.38. And the median was -2.68.
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 * 0.7575||+||0.528 * 1.0059||+||0.404 * 0.8316||+||0.892 * 1.0552||+||0.115 * 0.9239|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0557||+||4.679 * -0.0835||-||0.327 * 0.9244|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $2,048 Mil.|
Revenue was 2971 + 2941 + 3529 + 5726 = $15,167 Mil.
Gross Profit was 1725 + 1664 + 2262 + 4382 = $10,033 Mil.
Total Current Assets was $4,204 Mil.
Total Assets was $36,700 Mil.
Property, Plant and Equipment(Net PPE) was $28,658 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,936 Mil.
Selling, General & Admin. Expense(SGA) was $713 Mil.
Total Current Liabilities was $4,176 Mil.
Long-Term Debt was $6,355 Mil.
Net Income was 431 + 540 + 1149 + 375 = $2,495 Mil.
Non Operating Income was 0 + 0 + 0 + -3 = $-3 Mil.
Cash Flow from Operations was 1774 + 1088 + 1470 + 1229 = $5,561 Mil.
|Accounts Receivable was $2,562 Mil.
Revenue was 3127 + 2990 + 4020 + 4236 = $14,373 Mil.
Gross Profit was 1809 + 1874 + 2916 + 2965 = $9,564 Mil.
Total Current Assets was $3,455 Mil.
Total Assets was $35,776 Mil.
Property, Plant and Equipment(Net PPE) was $27,822 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,613 Mil.
Selling, General & Admin. Expense(SGA) was $640 Mil.
Total Current Liabilities was $4,673 Mil.
Long-Term Debt was $6,433 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)|
|=||(2048 / 15167)||/||(2562 / 14373)|
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)|
|=||(1664 / 14373)||/||(1725 / 15167)|
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 - (4204 + 28658) / 36700)||/||(1 - (3455 + 27822) / 35776)|
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))|
|=||(2613 / (2613 + 27822))||/||(2936 / (2936 + 28658))|
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)|
|=||(713 / 15167)||/||(640 / 14373)|
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)|
|=||((6355 + 4176) / 36700)||/||((6433 + 4673) / 35776)|
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|
|=||(2495 - -3||-||5561)||/||36700|
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 -3.10 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