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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 -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 * 0.2686||+||0.528 * 1.155||+||0.404 * 1.3519||+||0.892 * 0.7063||+||0.115 * 1.0523|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.5701||+||4.679 * -0.3647||-||0.327 * 1.3591|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $47 Mil.|
Revenue was 335.717 + 298.873 + 240.6 + 311.279 = $1,186 Mil.
Gross Profit was 226.13 + 189.732 + 115.375 + 171.794 = $703 Mil.
Total Current Assets was $967 Mil.
Total Assets was $4,539 Mil.
Property, Plant and Equipment(Net PPE) was $2,919 Mil.
Depreciation, Depletion and Amortization(DDA) was $520 Mil.
Selling, General & Admin. Expense(SGA) was $103 Mil.
Total Current Liabilities was $441 Mil.
Long-Term Debt was $1,487 Mil.
Net Income was -12.818 + -270.29 + -186.131 + -630.508 = $-1,100 Mil.
Non Operating Income was 3.828 + 2.011 + 1.65 + 3.762 = $11 Mil.
Cash Flow from Operations was 215.627 + 128.644 + 85.06 + 114.954 = $544 Mil.
|Accounts Receivable was $246 Mil.
Revenue was 356.055 + 424.283 + 361.002 + 538.551 = $1,680 Mil.
Gross Profit was 232.002 + 298.664 + 230.285 + 388.742 = $1,150 Mil.
Total Current Assets was $1,238 Mil.
Total Assets was $6,336 Mil.
Property, Plant and Equipment(Net PPE) was $4,423 Mil.
Depreciation, Depletion and Amortization(DDA) was $838 Mil.
Selling, General & Admin. Expense(SGA) was $93 Mil.
Total Current Liabilities was $481 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)|
|=||(46.749 / 1186.469)||/||(246.456 / 1679.891)|
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)|
|=||(1149.693 / 1679.891)||/||(703.031 / 1186.469)|
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 - (966.503 + 2918.524) / 4538.747)||/||(1 - (1238.461 + 4422.838) / 6336.362)|
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))|
|=||(837.625 / (837.625 + 4422.838))||/||(520.36 / (520.36 + 2918.524))|
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)|
|=||(103.183 / 1186.469)||/||(93.048 / 1679.891)|
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)|
|=||((1487.371 + 441.318) / 4538.747)||/||((1500 + 481.108) / 6336.362)|
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|
|=||(-1099.747 - 11.251||-||544.285)||/||4538.747|
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 -5.11 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