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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 -3.06.
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 * 1.0346||+||0.528 * 1.2148||+||0.404 * 2.909||+||0.892 * 0.5796||+||0.115 * 0.6193|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.7747||+||4.679 * -0.9111||-||0.327 * 1.9502|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $198.2 Mil.|
Revenue was 180.152 + 229.607 + 215.308 + 346.881 = $971.9 Mil.
Gross Profit was 96.312 + 135.223 + 104.876 + 230.807 = $567.2 Mil.
Total Current Assets was $1,109.0 Mil.
Total Assets was $4,103.1 Mil.
Property, Plant and Equipment(Net PPE) was $2,835.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $427.7 Mil.
Selling, General & Admin. Expense(SGA) was $136.6 Mil.
Total Current Liabilities was $496.5 Mil.
Long-Term Debt was $3,937.0 Mil.
Net Income was -640.412 + -1368.482 + -1034.953 + 265.177 = $-2,778.7 Mil.
Non Operating Income was 345.962 + 20.104 + -0.536 + 7.77 = $373.3 Mil.
Cash Flow from Operations was 41.892 + 228.899 + 90.095 + 225.43 = $586.3 Mil.
|Accounts Receivable was $330.5 Mil.
Revenue was 394.107 + 374.714 + 443.056 + 465.108 = $1,677.0 Mil.
Gross Profit was 284.046 + 284.038 + 307.719 + 313.126 = $1,188.9 Mil.
Total Current Assets was $1,004.7 Mil.
Total Assets was $6,978.4 Mil.
Property, Plant and Equipment(Net PPE) was $5,880.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $519.5 Mil.
Selling, General & Admin. Expense(SGA) was $132.8 Mil.
Total Current Liabilities was $671.2 Mil.
Long-Term Debt was $3,195.3 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)|
|=||(198.205 / 971.948)||/||(330.543 / 1676.985)|
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)|
|=||(135.223 / 1676.985)||/||(96.312 / 971.948)|
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 - (1108.997 + 2835.086) / 4103.082)||/||(1 - (1004.725 + 5880.705) / 6978.389)|
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))|
|=||(519.543 / (519.543 + 5880.705))||/||(427.7 / (427.7 + 2835.086))|
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)|
|=||(136.587 / 971.948)||/||(132.792 / 1676.985)|
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)|
|=||((3936.994 + 496.54) / 4103.082)||/||((3195.301 + 671.198) / 6978.389)|
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|
|=||(-2778.67 - 373.3||-||586.316)||/||4103.082|
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 -6.69 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