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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 -3.10.
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 * 0.9136||+||0.528 * 1.1894||+||0.404 * 1.6541||+||0.892 * 0.5992||+||0.115 * 0.5598|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.6356||+||4.679 * -0.5939||-||0.327 * 1.3935|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|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.
Net Income was -630.508 + -763.284 + -600.215 + -414.941 = $-2,409 Mil.
Non Operating Income was 3.762 + 2.375 + 3.854 + 3.585 = $14 Mil.
Cash Flow from Operations was 114.954 + 206.001 + 257.372 + 113.173 = $692 Mil.
|Accounts Receivable was $412 Mil.
Revenue was 538.551 + 649.74 + 636.669 + 599.216 = $2,424 Mil.
Gross Profit was 388.742 + 497.495 + 494.065 + 471.043 = $1,851 Mil.
Total Current Assets was $932 Mil.
Total Assets was $8,708 Mil.
Property, Plant and Equipment(Net PPE) was $7,115 Mil.
Depreciation, Depletion and Amortization(DDA) was $806 Mil.
Selling, General & Admin. Expense(SGA) was $96 Mil.
Total Current Liabilities was $776 Mil.
Long-Term Debt was $1,483 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)|
|=||(225.36 / 1452.619)||/||(411.672 / 2424.176)|
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)|
|=||(232.002 / 2424.176)||/||(171.794 / 1452.619)|
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 - (1077.93 + 3506.155) / 5243.286)||/||(1 - (931.804 + 7114.742) / 8708.469)|
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))|
|=||(806.021 / (806.021 + 7114.742))||/||(778.923 / (778.923 + 3506.155))|
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)|
|=||(94.247 / 1452.619)||/||(96.161 / 2424.176)|
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)|
|=||((1485.62 + 410.067) / 5243.286)||/||((1483.176 + 776.327) / 8708.469)|
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|
|=||(-2408.948 - 13.576||-||691.5)||/||5243.286|
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 -5.62 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