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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 -4.16. And the median was -2.88.
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 * 1.167||+||0.528 * 0.9809||+||0.404 * 0.9009||+||0.892 * 1.1635||+||0.115 * 0.9225|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9424||+||4.679 * -0.1347||-||0.327 * 1.1287|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $190 Mil.|
Revenue was 378.551 + 400.974 + 405.431 + 387.988 = $1,573 Mil.
Gross Profit was 178.041 + 206.848 + 215.566 + 202.809 = $803 Mil.
Total Current Assets was $252 Mil.
Total Assets was $4,474 Mil.
Property, Plant and Equipment(Net PPE) was $4,133 Mil.
Depreciation, Depletion and Amortization(DDA) was $405 Mil.
Selling, General & Admin. Expense(SGA) was $42 Mil.
Total Current Liabilities was $304 Mil.
Long-Term Debt was $812 Mil.
Net Income was -42.551 + 67.522 + 54.36 + 56.945 = $136 Mil.
Non Operating Income was 39.308 + 19.773 + -10.758 + -18.246 = $30 Mil.
Cash Flow from Operations was 159.466 + 223.999 + 202.068 + 123.46 = $709 Mil.
|Accounts Receivable was $140 Mil.
Revenue was 359.121 + 333.776 + 340.421 + 318.532 = $1,352 Mil.
Gross Profit was 183.25 + 161.551 + 172.28 + 160.082 = $677 Mil.
Total Current Assets was $212 Mil.
Total Assets was $4,022 Mil.
Property, Plant and Equipment(Net PPE) was $3,723 Mil.
Depreciation, Depletion and Amortization(DDA) was $334 Mil.
Selling, General & Admin. Expense(SGA) was $38 Mil.
Total Current Liabilities was $244 Mil.
Long-Term Debt was $646 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)|
|=||(189.812 / 1572.944)||/||(139.788 / 1351.85)|
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)|
|=||(206.848 / 1351.85)||/||(178.041 / 1572.944)|
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 - (252.491 + 4133.391) / 4473.728)||/||(1 - (212.031 + 3722.691) / 4022.39)|
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))|
|=||(333.907 / (333.907 + 3722.691))||/||(404.943 / (404.943 + 4133.391))|
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)|
|=||(42.023 / 1572.944)||/||(38.323 / 1351.85)|
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)|
|=||((812.163 + 304.171) / 4473.728)||/||((645.696 + 243.573) / 4022.39)|
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|
|=||(136.276 - 30.077||-||708.993)||/||4473.728|
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 -2.90 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