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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 12 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 * 1.0684||+||0.528 * 1.1111||+||0.404 * 2.6695||+||0.892 * 0.6676||+||0.115 * 0.82|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2834||+||4.679 * -0.4986||-||0.327 * 1.6053|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $238 Mil.|
Revenue was 229.607 + 215.308 + 346.881 + 394.107 = $1,186 Mil.
Gross Profit was 130.841 + 100.362 + 223.103 + 275.666 = $730 Mil.
Total Current Assets was $1,378 Mil.
Total Assets was $5,435 Mil.
Property, Plant and Equipment(Net PPE) was $3,886 Mil.
Depreciation, Depletion and Amortization(DDA) was $477 Mil.
Selling, General & Admin. Expense(SGA) was $127 Mil.
Total Current Liabilities was $551 Mil.
Long-Term Debt was $4,396 Mil.
Net Income was -1368.482 + -1034.953 + 265.177 + 157.338 = $-1,981 Mil.
Non Operating Income was 20.104 + -0.536 + 0.331 + -0.273 = $20 Mil.
Cash Flow from Operations was 228.899 + 90.095 + 225.43 + 164.892 = $709 Mil.
|Accounts Receivable was $333 Mil.
Revenue was 374.714 + 443.056 + 465.108 + 493.603 = $1,776 Mil.
Gross Profit was 276.198 + 299.912 + 305.653 + 333.219 = $1,215 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 $724 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)|
|=||(237.72 / 1185.903)||/||(333.3 / 1776.481)|
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)|
|=||(100.362 / 1776.481)||/||(130.841 / 1185.903)|
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 - (1377.835 + 3886.401) / 5435.048)||/||(1 - (1289.616 + 5541.819) / 6912.819)|
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))|
|=||(545.466 / (545.466 + 5541.819))||/||(476.806 / (476.806 + 3886.401))|
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)|
|=||(126.943 / 1185.903)||/||(148.173 / 1776.481)|
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)|
|=||((4395.639 + 551.331) / 5435.048)||/||((3195.165 + 724.333) / 6912.819)|
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|
|=||(-1980.92 - 19.626||-||709.316)||/||5435.048|
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 -4.58 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