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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 Plains Exploration & Production Company was 0.00. The lowest was 0.00. And the median was 0.00.
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 Plains Exploration & Production Company 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 * 1.2398||+||0.528 * 0.9558||+||0.404 * 0.6602||+||0.892 * 1.5901||+||0.115 * 0.9133|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.6084||+||4.679 * -0.0827||-||0.327 * 1.3523|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Mar13) TTM:||Last Year (Mar12) TTM:|
|Accounts Receivable was $563 Mil.|
Revenue was 1232.115 + 869.204 + 605.104 + 566.724 = $3,273 Mil.
Gross Profit was 984.972 + 677.82 + 444.707 + 420.46 = $2,528 Mil.
Total Current Assets was $1,760 Mil.
Total Assets was $17,190 Mil.
Property, Plant and Equipment(Net PPE) was $14,709 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,477 Mil.
Selling, General & Admin. Expense(SGA) was $163 Mil.
Total Current Liabilities was $1,069 Mil.
Long-Term Debt was $9,559 Mil.
Net Income was 22.585 + 191.422 + -43.974 + 223.199 = $393 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 818.723 + 284.214 + 415.621 + 295.545 = $1,814 Mil.
|Accounts Receivable was $286 Mil.
Revenue was 524.275 + 517.541 + 501.848 + 514.785 = $2,058 Mil.
Gross Profit was 389.868 + 373.977 + 384.098 + 371.646 = $1,520 Mil.
Total Current Assets was $1,388 Mil.
Total Assets was $9,988 Mil.
Property, Plant and Equipment(Net PPE) was $7,966 Mil.
Depreciation, Depletion and Amortization(DDA) was $724 Mil.
Selling, General & Admin. Expense(SGA) was $169 Mil.
Total Current Liabilities was $730 Mil.
Long-Term Debt was $3,837 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)|
|=||(563.313 / 3273.147)||/||(285.739 / 2058.449)|
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)|
|=||(677.82 / 2058.449)||/||(984.972 / 3273.147)|
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 - (1760.185 + 14709.262) / 17190.374)||/||(1 - (1387.705 + 7966.324) / 9988.489)|
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))|
|=||(724.305 / (724.305 + 7966.324))||/||(1477.077 / (1477.077 + 14709.262))|
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)|
|=||(163.405 / 3273.147)||/||(168.918 / 2058.449)|
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)|
|=||((9559.247 + 1069.451) / 17190.374)||/||((3836.551 + 730.29) / 9988.489)|
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|
|=||(393.232 - 0||-||1814.103)||/||17190.374|
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.
Plains Exploration & Production Company has a M-score of -2.34 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
Plains Exploration & Production Company Annual Data
Plains Exploration & Production Company Quarterly Data