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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 -0.95. The lowest was -3.81. And the median was -2.73.
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 * 1.5284||+||0.528 * 1.2432||+||0.404 * 1.0161||+||0.892 * 0.5929||+||0.115 * 0.7596|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.387||+||4.679 * -0.2577||-||0.327 * 1.2103|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $2,780 Mil.|
Revenue was 2281 + 2843 + 3246 + 3514 = $11,884 Mil.
Gross Profit was 1000 + 1489 + 1833 + 2034 = $6,356 Mil.
Total Current Assets was $8,237 Mil.
Total Assets was $42,018 Mil.
Property, Plant and Equipment(Net PPE) was $31,505 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,617 Mil.
Selling, General & Admin. Expense(SGA) was $1,231 Mil.
Total Current Liabilities was $6,826 Mil.
Long-Term Debt was $5,608 Mil.
Net Income was 78 + -5178 + -2609 + 176 = $-7,533 Mil.
Non Operating Income was -98 + -30 + -31 + -26 = $-185 Mil.
Cash Flow from Operations was 689 + 965 + 1020 + 805 = $3,479 Mil.
|Accounts Receivable was $3,068 Mil.
Revenue was 3096 + 6314 + 4930 + 5705 = $20,045 Mil.
Gross Profit was 1539 + 4581 + 3194 + 4014 = $13,328 Mil.
Total Current Assets was $10,434 Mil.
Total Assets was $53,389 Mil.
Property, Plant and Equipment(Net PPE) was $40,109 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,313 Mil.
Selling, General & Admin. Expense(SGA) was $1,497 Mil.
Total Current Liabilities was $6,915 Mil.
Long-Term Debt was $6,139 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)|
|=||(2780 / 11884)||/||(3068 / 20045)|
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)|
|=||(13328 / 20045)||/||(6356 / 11884)|
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 - (8237 + 31505) / 42018)||/||(1 - (10434 + 40109) / 53389)|
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))|
|=||(4313 / (4313 + 40109))||/||(4617 / (4617 + 31505))|
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)|
|=||(1231 / 11884)||/||(1497 / 20045)|
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)|
|=||((5608 + 6826) / 42018)||/||((6139 + 6915) / 53389)|
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|
|=||(-7533 - -185||-||3479)||/||42018|
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 -3.59 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