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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 -3.78 suggests that the company is not a manipulator.
During the past 11 years, the highest Beneish M-Score of SandRidge Energy Inc was -1.82. The lowest was -5.71. And the median was -3.01.
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 * 1.0793||+||0.528 * 0.7273||+||0.404 * 1.0268||+||0.892 * 0.7263||+||0.115 * 0.7604|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.8825||+||4.679 * -0.1769||-||0.327 * 0.9614|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $349 Mil.|
Revenue was 465.108 + 493.603 + 512.987 + 511.69 = $1,983 Mil.
Gross Profit was 281.371 + 341.473 + 336.084 + 341.63 = $1,301 Mil.
Total Current Assets was $1,242 Mil.
Total Assets was $7,685 Mil.
Property, Plant and Equipment(Net PPE) was $6,308 Mil.
Depreciation, Depletion and Amortization(DDA) was $630 Mil.
Selling, General & Admin. Expense(SGA) was $330 Mil.
Total Current Liabilities was $934 Mil.
Long-Term Debt was $3,195 Mil.
Net Income was 19.08 + -73.193 + -20.436 + -479.34 = $-554 Mil.
Non Operating Income was 19.939 + -1.826 + -0.106 + -81.394 = $-63 Mil.
Cash Flow from Operations was 273.623 + 210.324 + 263.226 + 121.457 = $869 Mil.
|Accounts Receivable was $446 Mil.
Revenue was 1338.098 + 532.798 + 478.434 + 381.635 = $2,731 Mil.
Gross Profit was 368.216 + 356.458 + 317.152 + 260.557 = $1,302 Mil.
Total Current Assets was $1,143 Mil.
Total Assets was $9,791 Mil.
Property, Plant and Equipment(Net PPE) was $8,480 Mil.
Depreciation, Depletion and Amortization(DDA) was $629 Mil.
Selling, General & Admin. Expense(SGA) was $242 Mil.
Total Current Liabilities was $1,170 Mil.
Long-Term Debt was $4,301 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)|
|=||(349.218 / 1983.388)||/||(445.506 / 2730.965)|
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)|
|=||(341.473 / 2730.965)||/||(281.371 / 1983.388)|
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 - (1241.823 + 6307.675) / 7684.795)||/||(1 - (1142.885 + 8479.977) / 9790.731)|
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))|
|=||(628.834 / (628.834 + 8479.977))||/||(629.868 / (629.868 + 6307.675))|
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)|
|=||(330.425 / 1983.388)||/||(241.682 / 2730.965)|
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)|
|=||((3194.907 + 933.818) / 7684.795)||/||((4301.083 + 1170.454) / 9790.731)|
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|
|=||(-553.889 - -63.387||-||868.63)||/||7684.795|
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 -3.78 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