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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 -3.37. And the median was -2.74.
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 * 1.6403||+||0.528 * 1.0838||+||0.404 * 0.9968||+||0.892 * 0.8188||+||0.115 * 1.0771|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.279||+||4.679 * -0.0702||-||0.327 * 1.1896|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $3,989 Mil.|
Revenue was 2826 + 2733 + 2558 + 2281 = $10,398 Mil.
Gross Profit was 1500 + 1395 + 1314 + 1000 = $5,209 Mil.
Total Current Assets was $8,428 Mil.
Total Assets was $43,109 Mil.
Property, Plant and Equipment(Net PPE) was $32,337 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,268 Mil.
Selling, General & Admin. Expense(SGA) was $1,330 Mil.
Total Current Liabilities was $6,362 Mil.
Long-Term Debt was $9,819 Mil.
Net Income was -272 + -241 + -139 + 78 = $-574 Mil.
Non Operating Income was -560 + -246 + -27 + -98 = $-931 Mil.
Cash Flow from Operations was 915 + 650 + 1129 + 689 = $3,383 Mil.
|Accounts Receivable was $2,970 Mil.
Revenue was 2843 + 3246 + 3514 + 3096 = $12,699 Mil.
Gross Profit was 1489 + 1833 + 2034 + 1539 = $6,895 Mil.
Total Current Assets was $9,402 Mil.
Total Assets was $43,409 Mil.
Property, Plant and Equipment(Net PPE) was $31,639 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,544 Mil.
Selling, General & Admin. Expense(SGA) was $1,270 Mil.
Total Current Liabilities was $6,842 Mil.
Long-Term Debt was $6,855 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)|
|=||(3989 / 10398)||/||(2970 / 12699)|
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)|
|=||(6895 / 12699)||/||(5209 / 10398)|
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 - (8428 + 32337) / 43109)||/||(1 - (9402 + 31639) / 43409)|
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))|
|=||(4544 / (4544 + 31639))||/||(4268 / (4268 + 32337))|
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)|
|=||(1330 / 10398)||/||(1270 / 12699)|
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)|
|=||((9819 + 6362) / 43109)||/||((6855 + 6842) / 43409)|
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|
|=||(-574 - -931||-||3383)||/||43109|
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 -2.44 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