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GuruFocus has detected 2 Warning Signs with Occidental Petroleum Corp $OXY.
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Occidental Petroleum Corp (NYSE:OXY)
Beneish M-Score
-2.44 (As of Today)

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 Corp has a M-score of -2.44 suggests that the company is not a manipulator.

OXY' s Beneish M-Score Range Over the Past 10 Years
Min: -3.37   Max: -0.95
Current: -2.44

-3.37
-0.95

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.


Definition

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
=-2.44

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

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

Measured as the ratio of days’ sales in receivables in year t to year t-1.

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)
=0.38363147 / 0.23387668
=1.6403

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(6895 / 12699) / (5209 / 10398)
=0.54295614 / 0.50096172
=1.0838

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

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)
=0.0543738 / 0.0545509
=0.9968

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=10398 / 12699
=0.8188

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))
=0.12558384 / 0.11659609
=1.0771

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)
=0.12790921 / 0.10000787
=1.279

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)
=0.37535085 / 0.31553365
=1.1896

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(-574 - -931 - 3383) / 43109
=-0.0702

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.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Occidental Petroleum Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.32120.51242.15080.95910.85161.08911.08580.72461.22041.6403
GMI 0.95990.96471.06560.96110.96181.02570.97031.01031.27091.0838
AQI 0.68821.12121.11180.9630.86740.88070.8011.4261.15550.9968
SGI 1.13231.22320.61041.28211.2590.83671.0631.02310.57860.8188
DEPI 0.92511.07140.975311.09011.13120.920.72290.77131.0771
SGAI 0.89820.73621.65750.83760.86651.0721.06330.95151.46031.279
LVGI 0.97220.89851.03841.2060.93280.96860.99311.2111.1771.1896
TATA -0.0437-0.0945-0.0684-0.0939-0.0888-0.1031-0.0975-0.0523-0.019-0.0702
M-score -2.40-3.05-2.14-2.78-2.82-3.05-2.91-2.87-2.70-2.44

Occidental Petroleum Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.97350.72460.60080.76880.81251.22041.52841.28011.55881.6403
GMI 0.79551.081.06621.22231.35661.18891.24321.23241.23751.0838
AQI 0.99691.4261.58351.57081.52671.15551.01611.06091.10830.9968
SGI 0.90131.02310.97580.88710.87020.57860.59290.61210.64410.8188
DEPI 1.29210.72290.67350.61060.50260.77130.75960.76460.84111.0771
SGAI 0.92910.95151.04511.13781.1971.46031.3871.41091.43081.279
LVGI 1.00511.2111.12421.21061.24941.1771.21031.18591.17851.1896
TATA -0.0689-0.0439-0.0303-0.024-0.0021-0.019-0.0217-0.0366-0.0479-0.0702
M-score -2.98-2.80-2.83-2.70-2.55-2.74-2.49-2.75-2.49-2.44
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