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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.
Murphy Oil Corp has a M-score of -2.62 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Murphy Oil Corp was 14.78. The lowest was -3.55. And the median was -2.64.
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 Murphy 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 * 0.3639||+||0.528 * 1.3166||+||0.404 * 2.6594||+||0.892 * 1.3892||+||0.115 * 0.8286|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.971||+||4.679 * -0.1519||-||0.327 * 1.0282|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $1,053 Mil.|
Revenue was 1349.021 + 1286.4 + -2947.801 + 2957.857 = $2,645 Mil.
Gross Profit was 928.344 + 885.679 + 729.295 + 995.359 = $3,539 Mil.
Total Current Assets was $3,233 Mil.
Total Assets was $17,874 Mil.
Property, Plant and Equipment(Net PPE) was $14,197 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,664 Mil.
Selling, General & Admin. Expense(SGA) was $387 Mil.
Total Current Liabilities was $2,851 Mil.
Long-Term Debt was $3,786 Mil.
Net Income was 129.412 + 155.253 + 75.421 + 284.809 = $645 Mil.
Non Operating Income was 0.178 + -0.814 + -15.768 + -53.1 = $-70 Mil.
Cash Flow from Operations was 723.804 + 735.879 + 959.971 + 1009.506 = $3,429 Mil.
|Accounts Receivable was $2,083 Mil.
Revenue was 1331.986 + 1290.938 + -3365.385 + 2646.728 = $1,904 Mil.
Gross Profit was 991.439 + 845.222 + 751.213 + 765.869 = $3,354 Mil.
Total Current Assets was $4,416 Mil.
Total Assets was $18,825 Mil.
Property, Plant and Equipment(Net PPE) was $14,233 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,355 Mil.
Selling, General & Admin. Expense(SGA) was $287 Mil.
Total Current Liabilities was $3,752 Mil.
Long-Term Debt was $3,046 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)|
|=||(1053.122 / 2645.477)||/||(2083.309 / 1904.267)|
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)|
|=||(885.679 / 1904.267)||/||(928.344 / 2645.477)|
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 - (3232.933 + 14196.884) / 17873.934)||/||(1 - (4415.713 + 14233.376) / 18824.975)|
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))|
|=||(1355.211 / (1355.211 + 14233.376))||/||(1664.11 / (1664.11 + 14196.884))|
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)|
|=||(387.187 / 2645.477)||/||(287.038 / 1904.267)|
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)|
|=||((3786.494 + 2850.521) / 17873.934)||/||((3046.062 + 3752.307) / 18824.975)|
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|
|=||(644.895 - -69.504||-||3429.16)||/||17873.934|
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.
Murphy Oil Corp has a M-score of -2.62 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
Murphy Oil Corp Annual Data
Murphy Oil Corp Quarterly Data