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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.
SandRidge Energy Inc has a M-score of -3.45 suggests that the company is not a manipulator.
During the past 11 years, the highest Beneish M-Score of SandRidge Energy Inc was 6.46. The lowest was -9.58. And the median was -3.04.
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 SandRidge Energy Inc 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 * 1.3181||+||0.528 * 0.7077||+||0.404 * 0.5436||+||0.892 * 0.6135||+||0.115 * 1.1765|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.6316||+||4.679 * -0.1364||-||0.327 * 1.0733|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $333 Mil.|
Revenue was 374.714 + 443.056 + 465.108 + 493.603 = $1,776 Mil.
Gross Profit was 284.653 + 308.233 + 281.371 + 341.473 = $1,216 Mil.
Total Current Assets was $1,290 Mil.
Total Assets was $6,913 Mil.
Property, Plant and Equipment(Net PPE) was $5,542 Mil.
Depreciation, Depletion and Amortization(DDA) was $545 Mil.
Selling, General & Admin. Expense(SGA) was $148 Mil.
Total Current Liabilities was $708 Mil.
Long-Term Debt was $3,195 Mil.
Net Income was -24.439 + -128.015 + 19.08 + -73.193 = $-207 Mil.
Non Operating Income was 1.338 + 2.094 + 19.939 + -1.826 = $22 Mil.
Cash Flow from Operations was 140.341 + 90.451 + 273.623 + 210.324 = $715 Mil.
|Accounts Receivable was $412 Mil.
Revenue was 512.987 + 511.69 + 1338.098 + 532.798 = $2,896 Mil.
Gross Profit was 336.084 + 341.63 + 368.216 + 356.458 = $1,402 Mil.
Total Current Assets was $1,642 Mil.
Total Assets was $7,754 Mil.
Property, Plant and Equipment(Net PPE) was $5,944 Mil.
Depreciation, Depletion and Amortization(DDA) was $700 Mil.
Selling, General & Admin. Expense(SGA) was $382 Mil.
Total Current Liabilities was $884 Mil.
Long-Term Debt was $3,195 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)|
|=||(333.3 / 1776.481)||/||(412.14 / 2895.573)|
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)|
|=||(308.233 / 2895.573)||/||(284.653 / 1776.481)|
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 - (1289.616 + 5541.819) / 6912.819)||/||(1 - (1641.99 + 5943.715) / 7753.636)|
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))|
|=||(700.435 / (700.435 + 5943.715))||/||(545.466 / (545.466 + 5541.819))|
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)|
|=||(148.173 / 1776.481)||/||(382.37 / 2895.573)|
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)|
|=||((3195.165 + 707.557) / 6912.819)||/||((3194.66 + 883.793) / 7753.636)|
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|
|=||(-206.567 - 21.545||-||714.739)||/||6912.819|
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.
SandRidge Energy Inc has a M-score of -3.45 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
SandRidge Energy Inc Annual Data
SandRidge Energy Inc Quarterly Data