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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.
Occidental Petroleum Corporation has a M-score of -2.93 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Occidental Petroleum Corporation was -0.96. The lowest was -3.28. And the median was -2.76.
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 Occidental Petroleum Corporation 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 * 1.0877||+||0.528 * 0.9581||+||0.404 * 0.801||+||0.892 * 1.0611||+||0.115 * 0.9121|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0594||+||4.679 * -0.0996||-||0.327 * 0.9931|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $5,674 Mil.|
Revenue was 7233 + 6475 + 6121 + 5907 = $25,736 Mil.
Gross Profit was 9202 + 3261 + 2941 + 2770 = $18,174 Mil.
Total Current Assets was $11,323 Mil.
Total Assets was $69,443 Mil.
Property, Plant and Equipment(Net PPE) was $55,821 Mil.
Depreciation, Depletion and Amortization(DDA) was $5,347 Mil.
Selling, General & Admin. Expense(SGA) was $1,801 Mil.
Total Current Liabilities was $8,434 Mil.
Long-Term Debt was $6,939 Mil.
Net Income was 1643 + 1583 + 1322 + 1355 = $5,903 Mil.
Non Operating Income was -17 + -26 + -28 + -35 = $-106 Mil.
Cash Flow from Operations was 3141 + 3561 + 3513 + 2712 = $12,927 Mil.
|Accounts Receivable was $4,916 Mil.
Revenue was 6187 + 5991 + 5792 + 6283 = $24,253 Mil.
Gross Profit was 7529 + 2815 + 2732 + 3333 = $16,409 Mil.
Total Current Assets was $9,492 Mil.
Total Assets was $64,210 Mil.
Property, Plant and Equipment(Net PPE) was $52,064 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,511 Mil.
Selling, General & Admin. Expense(SGA) was $1,602 Mil.
Total Current Liabilities was $7,290 Mil.
Long-Term Debt was $7,023 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)|
|=||(5674 / 25736)||/||(4916 / 24253)|
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)|
|=||(3261 / 24253)||/||(9202 / 25736)|
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 - (11323 + 55821) / 69443)||/||(1 - (9492 + 52064) / 64210)|
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))|
|=||(4511 / (4511 + 52064))||/||(5347 / (5347 + 55821))|
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)|
|=||(1801 / 25736)||/||(1602 / 24253)|
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)|
|=||((6939 + 8434) / 69443)||/||((7023 + 7290) / 64210)|
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|
|=||(5903 - -106||-||12927)||/||69443|
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.
Occidental Petroleum Corporation has a M-score of -2.93 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
Occidental Petroleum Corporation Annual Data
Occidental Petroleum Corporation Quarterly Data