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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 12 years, the highest Beneish M-Score of Cimarex Energy Co was 3.59. The lowest was -5.12. And the median was -3.08.
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 * 0.8753||+||0.528 * 1.0234||+||0.404 * 0.822||+||0.892 * 1.2497||+||0.115 * 0.8995|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8668||+||4.679 * -0.1212||-||0.327 * 1.1768|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $95 Mil.|
Revenue was 649.74 + 636.669 + 599.216 + 516.602 = $2,402 Mil.
Gross Profit was 497.495 + 494.065 + 471.043 + 410.193 = $1,873 Mil.
Total Current Assets was $1,111 Mil.
Total Assets was $8,644 Mil.
Property, Plant and Equipment(Net PPE) was $6,854 Mil.
Depreciation, Depletion and Amortization(DDA) was $761 Mil.
Selling, General & Admin. Expense(SGA) was $92 Mil.
Total Current Liabilities was $816 Mil.
Long-Term Debt was $1,500 Mil.
Net Income was 144.315 + 148.64 + 138.457 + 206.827 = $638 Mil.
Non Operating Income was 11.123 + 4.129 + 6.955 + 7.881 = $30 Mil.
Cash Flow from Operations was 502.201 + 421.745 + 348.024 + 383.6 = $1,656 Mil.
|Accounts Receivable was $87 Mil.
Revenue was 561.336 + 493.757 + 426.356 + 440.868 = $1,922 Mil.
Gross Profit was 452.362 + 397.118 + 332.18 + 352.051 = $1,534 Mil.
Total Current Assets was $497 Mil.
Total Assets was $7,054 Mil.
Property, Plant and Equipment(Net PPE) was $5,883 Mil.
Depreciation, Depletion and Amortization(DDA) was $581 Mil.
Selling, General & Admin. Expense(SGA) was $85 Mil.
Total Current Liabilities was $706 Mil.
Long-Term Debt was $900 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)|
|=||(95.243 / 2402.227)||/||(87.069 / 1922.317)|
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)|
|=||(494.065 / 1922.317)||/||(497.495 / 2402.227)|
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 - (1110.537 + 6854.11) / 8644.094)||/||(1 - (496.873 + 5882.917) / 7054.364)|
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))|
|=||(581.281 / (581.281 + 5882.917))||/||(761.302 / (761.302 + 6854.11))|
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)|
|=||(92.268 / 2402.227)||/||(85.18 / 1922.317)|
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)|
|=||((1500 + 815.643) / 8644.094)||/||((900 + 705.88) / 7054.364)|
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|
|=||(638.239 - 30.088||-||1655.57)||/||8644.094|
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 -3.05 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