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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 Unit Corp was 14.85. The lowest was -4.88. And the median was -2.85.
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 Unit Corp 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 * 0.8257||+||0.528 * 1.1467||+||0.404 * 1.3521||+||0.892 * 0.6826||+||0.115 * 0.7531|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.3855||+||4.679 * -0.4152||-||0.327 * 1.4312|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $101 Mil.|
Revenue was 212.393 + 214.447 + 255.099 + 378.551 = $1,060 Mil.
Gross Profit was 97.905 + 91.398 + 113.967 + 178.041 = $481 Mil.
Total Current Assets was $151 Mil.
Total Assets was $3,285 Mil.
Property, Plant and Equipment(Net PPE) was $3,047 Mil.
Depreciation, Depletion and Amortization(DDA) was $390 Mil.
Selling, General & Admin. Expense(SGA) was $38 Mil.
Total Current Liabilities was $182 Mil.
Long-Term Debt was $908 Mil.
Net Income was -205.281 + -274.389 + -248.354 + -42.551 = $-771 Mil.
Non Operating Income was 8.266 + -1.895 + 6.584 + 39.308 = $52 Mil.
Cash Flow from Operations was 123.876 + 97.297 + 160.309 + 159.466 = $541 Mil.
|Accounts Receivable was $179 Mil.
Revenue was 400.974 + 405.431 + 387.988 + 359.121 = $1,554 Mil.
Gross Profit was 206.848 + 215.566 + 202.809 + 183.25 = $808 Mil.
Total Current Assets was $220 Mil.
Total Assets was $4,432 Mil.
Property, Plant and Equipment(Net PPE) was $4,125 Mil.
Depreciation, Depletion and Amortization(DDA) was $386 Mil.
Selling, General & Admin. Expense(SGA) was $40 Mil.
Total Current Liabilities was $351 Mil.
Long-Term Debt was $677 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)|
|=||(101.155 / 1060.49)||/||(179.464 / 1553.514)|
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)|
|=||(91.398 / 1553.514)||/||(97.905 / 1060.49)|
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 - (150.67 + 3046.634) / 3284.518)||/||(1 - (220.127 + 4124.648) / 4431.811)|
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))|
|=||(385.729 / (385.729 + 4124.648))||/||(390.27 / (390.27 + 3046.634))|
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)|
|=||(38.251 / 1060.49)||/||(40.444 / 1553.514)|
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)|
|=||((908.234 + 182.351) / 3284.518)||/||((676.843 + 351.339) / 4431.811)|
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|
|=||(-770.575 - 52.263||-||540.948)||/||3284.518|
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.
Unit Corp has a M-score of -4.88 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
Unit Corp Annual Data
Unit Corp Quarterly Data