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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 Cimarex Energy Co was 3.52. The lowest was -5.62. And the median was -3.12.
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 * 1.4076||+||0.528 * 1.0056||+||0.404 * 1.1092||+||0.892 * 0.8656||+||0.115 * 1.3754|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2065||+||4.679 * -0.2224||-||0.327 * 1.1877|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $275 Mil.|
Revenue was 382.155 + 335.717 + 298.873 + 240.6 = $1,257 Mil.
Gross Profit was 271.596 + 226.13 + 189.732 + 115.375 = $803 Mil.
Total Current Assets was $969 Mil.
Total Assets was $4,682 Mil.
Property, Plant and Equipment(Net PPE) was $3,060 Mil.
Depreciation, Depletion and Amortization(DDA) was $466 Mil.
Selling, General & Admin. Expense(SGA) was $98 Mil.
Total Current Liabilities was $522 Mil.
Long-Term Debt was $1,488 Mil.
Net Income was 38.19 + -12.818 + -270.29 + -186.131 = $-431 Mil.
Non Operating Income was 3.218 + 3.828 + 2.011 + 1.65 = $11 Mil.
Cash Flow from Operations was 169.894 + 215.627 + 128.644 + 85.06 = $599 Mil.
|Accounts Receivable was $225 Mil.
Revenue was 311.279 + 356.055 + 424.283 + 361.002 = $1,453 Mil.
Gross Profit was 171.794 + 232.002 + 298.664 + 230.285 = $933 Mil.
Total Current Assets was $1,078 Mil.
Total Assets was $5,243 Mil.
Property, Plant and Equipment(Net PPE) was $3,506 Mil.
Depreciation, Depletion and Amortization(DDA) was $779 Mil.
Selling, General & Admin. Expense(SGA) was $94 Mil.
Total Current Liabilities was $410 Mil.
Long-Term Debt was $1,486 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)|
|=||(274.57 / 1257.345)||/||(225.36 / 1452.619)|
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)|
|=||(932.745 / 1452.619)||/||(802.833 / 1257.345)|
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 - (969.304 + 3059.536) / 4681.693)||/||(1 - (1077.93 + 3506.155) / 5243.286)|
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))|
|=||(778.923 / (778.923 + 3506.155))||/||(465.936 / (465.936 + 3059.536))|
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)|
|=||(98.424 / 1257.345)||/||(94.247 / 1452.619)|
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)|
|=||((1487.939 + 522.352) / 4681.693)||/||((1485.62 + 410.067) / 5243.286)|
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|
|=||(-431.049 - 10.707||-||599.225)||/||4681.693|
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 -3.27 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