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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 -0.58. The lowest was -4.28. And the median was -2.69.
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 * 0.7866||+||0.528 * 1.0358||+||0.404 * 0.65||+||0.892 * 0.744||+||0.115 * 0.8751|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.3523||+||4.679 * -0.0831||-||0.327 * 1.0082|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $1,195 Mil.|
Revenue was 1531 + 1532 + 2497 + 2971 = $8,531 Mil.
Gross Profit was 818 + 776 + 1394 + 1725 = $4,713 Mil.
Total Current Assets was $4,130 Mil.
Total Assets was $35,770 Mil.
Property, Plant and Equipment(Net PPE) was $29,121 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,110 Mil.
Selling, General & Admin. Expense(SGA) was $667 Mil.
Total Current Liabilities was $3,052 Mil.
Long-Term Debt was $7,321 Mil.
Net Income was -386 + -276 + 926 + 431 = $695 Mil.
Non Operating Income was 0 + 0 + 20 + 0 = $20 Mil.
Cash Flow from Operations was 408 + 309 + 1155 + 1774 = $3,646 Mil.
|Accounts Receivable was $2,042 Mil.
Revenue was 2941 + 2849 + 2550 + 3127 = $11,467 Mil.
Gross Profit was 1664 + 1662 + 1427 + 1809 = $6,562 Mil.
Total Current Assets was $4,218 Mil.
Total Assets was $35,935 Mil.
Property, Plant and Equipment(Net PPE) was $27,824 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,566 Mil.
Selling, General & Admin. Expense(SGA) was $663 Mil.
Total Current Liabilities was $3,974 Mil.
Long-Term Debt was $6,362 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)|
|=||(1195 / 8531)||/||(2042 / 11467)|
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)|
|=||(776 / 11467)||/||(818 / 8531)|
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 - (4130 + 29121) / 35770)||/||(1 - (4218 + 27824) / 35935)|
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))|
|=||(2566 / (2566 + 27824))||/||(3110 / (3110 + 29121))|
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)|
|=||(667 / 8531)||/||(663 / 11467)|
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)|
|=||((7321 + 3052) / 35770)||/||((6362 + 3974) / 35935)|
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|
|=||(695 - 20||-||3646)||/||35770|
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 -3.49 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