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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 14 years, the highest Beneish M-Score of Cimarex Energy Co was 3.52. The lowest was -6.72. 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 Cimarex Energy Co 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 * 0.8094||+||0.528 * 1.2002||+||0.404 * 1.5514||+||0.892 * 0.6094||+||0.115 * 0.6593|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.6366||+||4.679 * -0.5825||-||0.327 * 1.4397|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $62 Mil.|
Revenue was 240.6 + 311.279 + 356.055 + 424.283 = $1,332 Mil.
Gross Profit was 115.375 + 171.794 + 232.002 + 298.664 = $818 Mil.
Total Current Assets was $931 Mil.
Total Assets was $4,901 Mil.
Property, Plant and Equipment(Net PPE) was $3,314 Mil.
Depreciation, Depletion and Amortization(DDA) was $690 Mil.
Selling, General & Admin. Expense(SGA) was $93 Mil.
Total Current Liabilities was $357 Mil.
Long-Term Debt was $1,486 Mil.
Net Income was -186.131 + -630.508 + -763.284 + -600.215 = $-2,180 Mil.
Non Operating Income was 1.65 + 3.762 + 2.375 + 3.854 = $12 Mil.
Cash Flow from Operations was 85.06 + 114.954 + 206.001 + 257.372 = $663 Mil.
|Accounts Receivable was $125 Mil.
Revenue was 361.002 + 538.551 + 649.74 + 636.669 = $2,186 Mil.
Gross Profit was 230.285 + 388.742 + 497.495 + 494.065 = $1,611 Mil.
Total Current Assets was $561 Mil.
Total Assets was $7,860 Mil.
Property, Plant and Equipment(Net PPE) was $6,621 Mil.
Depreciation, Depletion and Amortization(DDA) was $849 Mil.
Selling, General & Admin. Expense(SGA) was $93 Mil.
Total Current Liabilities was $553 Mil.
Long-Term Debt was $1,500 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)|
|=||(61.591 / 1332.217)||/||(124.862 / 2185.962)|
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)|
|=||(171.794 / 2185.962)||/||(115.375 / 1332.217)|
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 - (931.09 + 3313.969) / 4901.261)||/||(1 - (561.185 + 6620.57) / 7860.051)|
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))|
|=||(848.868 / (848.868 + 6620.57))||/||(690.244 / (690.244 + 3313.969))|
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)|
|=||(92.579 / 1332.217)||/||(92.818 / 2185.962)|
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)|
|=||((1486.211 + 357.092) / 4901.261)||/||((1500 + 553.195) / 7860.051)|
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|
|=||(-2180.138 - 11.641||-||663.387)||/||4901.261|
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.
Cimarex Energy Co has a M-score of -5.69 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
Cimarex Energy Co Annual Data
Cimarex Energy Co Quarterly Data