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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 Murphy Oil Corp was 5.39. The lowest was -4.14. And the median was -2.72.
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 * 1.0861||+||0.528 * 1.0748||+||0.404 * 6.5355||+||0.892 * 0.4979||+||0.115 * 1.028|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.6457||+||4.679 * -0.2803||-||0.327 * 0.9991|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $293 Mil.|
Revenue was 437.462 + 430.295 + 658.094 + 714.949 = $2,241 Mil.
Gross Profit was 267.493 + 258.555 + 457.829 + 516.858 = $1,501 Mil.
Total Current Assets was $1,038 Mil.
Total Assets was $9,915 Mil.
Property, Plant and Equipment(Net PPE) was $8,565 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,277 Mil.
Selling, General & Admin. Expense(SGA) was $281 Mil.
Total Current Liabilities was $881 Mil.
Long-Term Debt was $2,435 Mil.
Net Income was 2.93 + -198.802 + -587.132 + -1595.426 = $-2,378 Mil.
Non Operating Income was -27.266 + -107.976 + 2335.215 + -2380.384 = $-180 Mil.
Cash Flow from Operations was 70.066 + 43.312 + 86.841 + 381.317 = $582 Mil.
|Accounts Receivable was $542 Mil.
Revenue was 738.29 + 921.747 + 1407.626 + 1433.037 = $4,501 Mil.
Gross Profit was 491.758 + 689.326 + 1008.487 + 1050.086 = $3,240 Mil.
Total Current Assets was $2,499 Mil.
Total Assets was $15,150 Mil.
Property, Plant and Equipment(Net PPE) was $12,578 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,935 Mil.
Selling, General & Admin. Expense(SGA) was $343 Mil.
Total Current Liabilities was $1,807 Mil.
Long-Term Debt was $3,265 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)|
|=||(293.312 / 2240.8)||/||(542.417 / 4500.7)|
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)|
|=||(3239.657 / 4500.7)||/||(1500.735 / 2240.8)|
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 - (1037.855 + 8565.485) / 9914.632)||/||(1 - (2499.433 + 12577.749) / 15149.964)|
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))|
|=||(1935.422 / (1935.422 + 12577.749))||/||(1276.795 / (1276.795 + 8565.485))|
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)|
|=||(281.14 / 2240.8)||/||(343.121 / 4500.7)|
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)|
|=||((2435.486 + 880.749) / 9914.632)||/||((3264.868 + 1806.788) / 15149.964)|
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|
|=||(-2378.43 - -180.411||-||581.536)||/||9914.632|
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 -1.99 signals that the company is likely to 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