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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 Occidental Petroleum Corp was -0.96. The lowest was -3.52. And the median was -2.77.
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 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 * 0.8262||+||0.528 * 0.9571||+||0.404 * 0.9969||+||0.892 * 1.0619||+||0.115 * 1.0018|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.939||+||4.679 * -0.0776||-||0.327 * 1.0051|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $4,960 Mil.|
Revenue was 6022 + 6846 + 6118 + 7233 = $26,219 Mil.
Gross Profit was 2637 + 3549 + 2920 + 9202 = $18,308 Mil.
Total Current Assets was $10,507 Mil.
Total Assets was $71,510 Mil.
Property, Plant and Equipment(Net PPE) was $58,465 Mil.
Depreciation, Depletion and Amortization(DDA) was $5,394 Mil.
Selling, General & Admin. Expense(SGA) was $1,781 Mil.
Total Current Liabilities was $9,521 Mil.
Long-Term Debt was $6,837 Mil.
Net Income was 1208 + 1431 + 1390 + 1643 = $5,672 Mil.
Non Operating Income was -31 + -46 + -30 + -17 = $-124 Mil.
Cash Flow from Operations was 2638 + 2867 + 2697 + 3141 = $11,343 Mil.
|Accounts Receivable was $5,653 Mil.
Revenue was 6475 + 6121 + 5907 + 6187 = $24,690 Mil.
Gross Profit was 3261 + 2941 + 2770 + 7529 = $16,501 Mil.
Total Current Assets was $11,938 Mil.
Total Assets was $69,437 Mil.
Property, Plant and Equipment(Net PPE) was $55,027 Mil.
Depreciation, Depletion and Amortization(DDA) was $5,087 Mil.
Selling, General & Admin. Expense(SGA) was $1,786 Mil.
Total Current Liabilities was $8,842 Mil.
Long-Term Debt was $6,961 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)|
|=||(4960 / 26219)||/||(5653 / 24690)|
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)|
|=||(3549 / 24690)||/||(2637 / 26219)|
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 - (10507 + 58465) / 71510)||/||(1 - (11938 + 55027) / 69437)|
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))|
|=||(5087 / (5087 + 55027))||/||(5394 / (5394 + 58465))|
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)|
|=||(1781 / 26219)||/||(1786 / 24690)|
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)|
|=||((6837 + 9521) / 71510)||/||((6961 + 8842) / 69437)|
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|
|=||(5672 - -124||-||11343)||/||71510|
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 Corp has a M-score of -2.96 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 Corp Annual Data
Occidental Petroleum Corp Quarterly Data