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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 -2.91 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Marathon Oil Corp was -2.05. The lowest was -3.96. 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 * 0.957||+||0.528 * 0.9884||+||0.404 * 1.3632||+||0.892 * 0.9222||+||0.115 * 0.8932|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0765||+||4.679 * -0.0987||-||0.327 * 0.9171|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $2,134 Mil.|
Revenue was 3041 + 3914 + 3898 + 4106 = $14,959 Mil.
Gross Profit was 1877 + 2549 + 2703 + 2988 = $10,117 Mil.
Total Current Assets was $2,975 Mil.
Total Assets was $35,620 Mil.
Property, Plant and Equipment(Net PPE) was $28,145 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,790 Mil.
Selling, General & Admin. Expense(SGA) was $687 Mil.
Total Current Liabilities was $4,333 Mil.
Long-Term Debt was $6,394 Mil.
Net Income was 375 + 569 + 426 + 383 = $1,753 Mil.
Non Operating Income was -3 + 0 + 0 + 0 = $-3 Mil.
Cash Flow from Operations was 1229 + 1645 + 868 + 1528 = $5,270 Mil.
|Accounts Receivable was $2,418 Mil.
Revenue was 4236 + 4161 + 3784 + 4040 = $16,221 Mil.
Gross Profit was 2995 + 2819 + 2437 + 2592 = $10,843 Mil.
Total Current Assets was $3,762 Mil.
Total Assets was $35,306 Mil.
Property, Plant and Equipment(Net PPE) was $28,272 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,477 Mil.
Selling, General & Admin. Expense(SGA) was $692 Mil.
Total Current Liabilities was $5,081 Mil.
Long-Term Debt was $6,512 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)|
|=||(2134 / 14959)||/||(2418 / 16221)|
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)|
|=||(2549 / 16221)||/||(1877 / 14959)|
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 - (2975 + 28145) / 35620)||/||(1 - (3762 + 28272) / 35306)|
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))|
|=||(2477 / (2477 + 28272))||/||(2790 / (2790 + 28145))|
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)|
|=||(687 / 14959)||/||(692 / 16221)|
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)|
|=||((6394 + 4333) / 35620)||/||((6512 + 5081) / 35306)|
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|
|=||(1753 - -3||-||5270)||/||35620|
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 -2.91 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