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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 -3.60. And the median was -2.75.
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 * 0.8802||+||0.528 * 1.0797||+||0.404 * 1.5708||+||0.892 * 0.7747||+||0.115 * 0.6106|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1738||+||4.679 * -0.167||-||0.327 * 1.2106|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $3,973 Mil.|
Revenue was 3514 + 3096 + 2961 + 6022 = $15,593 Mil.
Gross Profit was 2034 + 510 + 6038 + 2637 = $11,219 Mil.
Total Current Assets was $11,008 Mil.
Total Assets was $54,369 Mil.
Property, Plant and Equipment(Net PPE) was $40,478 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,405 Mil.
Selling, General & Admin. Expense(SGA) was $1,275 Mil.
Total Current Liabilities was $7,825 Mil.
Long-Term Debt was $6,880 Mil.
Net Income was 176 + -218 + -3413 + 1208 = $-2,247 Mil.
Non Operating Income was -26 + -324 + 341 + -31 = $-40 Mil.
Cash Flow from Operations was 805 + 561 + 2866 + 2638 = $6,870 Mil.
|Accounts Receivable was $5,826 Mil.
Revenue was 5705 + 4998 + 2949 + 6475 = $20,127 Mil.
Gross Profit was 4014 + 2378 + 5983 + 3261 = $15,636 Mil.
Total Current Assets was $10,786 Mil.
Total Assets was $70,293 Mil.
Property, Plant and Equipment(Net PPE) was $57,134 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,642 Mil.
Selling, General & Admin. Expense(SGA) was $1,402 Mil.
Total Current Liabilities was $8,869 Mil.
Long-Term Debt was $6,835 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)|
|=||(3973 / 15593)||/||(5826 / 20127)|
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)|
|=||(510 / 20127)||/||(2034 / 15593)|
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 - (11008 + 40478) / 54369)||/||(1 - (10786 + 57134) / 70293)|
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))|
|=||(3642 / (3642 + 57134))||/||(4405 / (4405 + 40478))|
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)|
|=||(1275 / 15593)||/||(1402 / 20127)|
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)|
|=||((6880 + 7825) / 54369)||/||((6835 + 8869) / 70293)|
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|
|=||(-2247 - -40||-||6870)||/||54369|
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 -3.44 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