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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 -4.37. And the median was -2.65.
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 * 1.1483||+||0.528 * 1.0281||+||0.404 * 1.2199||+||0.892 * 0.6881||+||0.115 * 1.1639|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.182||+||4.679 * -0.0798||-||0.327 * 0.9164|
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $783 Mil.|
Revenue was 1229 + 1302 + 730 + 1475 = $4,736 Mil.
Gross Profit was 665 + 769 + 235 + 826 = $2,495 Mil.
Total Current Assets was $3,042 Mil.
Total Assets was $32,310 Mil.
Property, Plant and Equipment(Net PPE) was $25,976 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,432 Mil.
Selling, General & Admin. Expense(SGA) was $514 Mil.
Total Current Liabilities was $1,408 Mil.
Long-Term Debt was $7,277 Mil.
Net Income was -192 + -170 + -407 + -793 = $-1,562 Mil.
Non Operating Income was 0 + 0 + 0 + 45 = $45 Mil.
Cash Flow from Operations was 366 + 178 + 74 + 352 = $970 Mil.
|Accounts Receivable was $991 Mil.
Revenue was 1323 + 1531 + 1532 + 2497 = $6,883 Mil.
Gross Profit was 740 + 818 + 776 + 1394 = $3,728 Mil.
Total Current Assets was $3,858 Mil.
Total Assets was $34,674 Mil.
Property, Plant and Equipment(Net PPE) was $27,920 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,090 Mil.
Selling, General & Admin. Expense(SGA) was $632 Mil.
Total Current Liabilities was $2,848 Mil.
Long-Term Debt was $7,323 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)|
|=||(783 / 4736)||/||(991 / 6883)|
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)|
|=||(3728 / 6883)||/||(2495 / 4736)|
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 - (3042 + 25976) / 32310)||/||(1 - (3858 + 27920) / 34674)|
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))|
|=||(3090 / (3090 + 27920))||/||(2432 / (2432 + 25976))|
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)|
|=||(514 / 4736)||/||(632 / 6883)|
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)|
|=||((7277 + 1408) / 32310)||/||((7323 + 2848) / 34674)|
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|
|=||(-1562 - 45||-||970)||/||32310|
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 -2.88 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