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GuruFocus has detected 2 Warning Signs with Apache Corp $APA.
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Apache Corp (NYSE:APA)
Beneish M-Score
-4.05 (As of Today)

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.

Apache Corp has a M-score of -4.05 suggests that the company is not a manipulator.

APA' s Beneish M-Score Range Over the Past 10 Years
Min: -6.71   Max: -0.64
Current: -4.05

-6.71
-0.64

During the past 13 years, the highest Beneish M-Score of Apache Corp was -0.64. The lowest was -6.71. And the median was -2.82.


Definition

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 Apache Corp 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 * 1.0775+0.528 * 0.9459+0.404 * 0.3452+0.892 * 0.9703+0.115 * -3.9704
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1127+4.679 * -0.171-0.327 * 0.775
=-4.05

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $1,171 Mil.
Revenue was 1878 + 1451 + 1438 + 1382 = $6,149 Mil.
Gross Profit was 1485 + 1031 + 1005 + 971 = $4,492 Mil.
Total Current Assets was $3,426 Mil.
Total Assets was $22,610 Mil.
Property, Plant and Equipment(Net PPE) was $18,780 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,516 Mil.
Selling, General & Admin. Expense(SGA) was $420 Mil.
Total Current Liabilities was $1,898 Mil.
Long-Term Debt was $8,327 Mil.
Net Income was 213 + -182 + -607 + -244 = $-820 Mil.
Non Operating Income was 97 + 102 + 100 + 102 = $401 Mil.
Cash Flow from Operations was 455 + 796 + 651 + 744 = $2,646 Mil.
Accounts Receivable was $1,120 Mil.
Revenue was 1083 + 1482 + 1526 + 2246 = $6,337 Mil.
Gross Profit was 653 + 978 + 1018 + 1730 = $4,379 Mil.
Total Current Assets was $3,222 Mil.
Total Assets was $17,679 Mil.
Property, Plant and Equipment(Net PPE) was $13,542 Mil.
Depreciation, Depletion and Amortization(DDA) was $-4,324 Mil.
Selling, General & Admin. Expense(SGA) was $389 Mil.
Total Current Liabilities was $1,598 Mil.
Long-Term Debt was $8,718 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(1171 / 6149) / (1120 / 6337)
=0.19043747 / 0.17673978
=1.0775

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(4379 / 6337) / (4492 / 6149)
=0.69102099 / 0.73052529
=0.9459

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (3426 + 18780) / 22610) / (1 - (3222 + 13542) / 17679)
=0.0178682 / 0.05175632
=0.3452

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=6149 / 6337
=0.9703

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))
=(-4324 / (-4324 + 13542)) / (2516 / (2516 + 18780))
=-0.46908223 / 0.11814425
=-3.9704

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)
=(420 / 6149) / (389 / 6337)
=0.06830379 / 0.06138551
=1.1127

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)
=((8327 + 1898) / 22610) / ((8718 + 1598) / 17679)
=0.45223352 / 0.58351717
=0.775

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(-820 - 401 - 2646) / 22610
=-0.171

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.

Apache Corp has a M-score of -4.05 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Apache Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.95050.56331.63850.98341.03311.02191.09740.84181.05751.1575
GMI 1.00120.94291.10050.96730.98671.01731.02211.01821.11751.024
AQI 1.17141.17130.93161.66590.83711.18791.12560.56471.36670.5114
SGI 1.23381.24370.69531.40361.39660.98080.87160.81440.58540.7777
DEPI 0.92120.34491.3312.480.88310.74031.13651.16970.62941.122
SGAI 1.05490.84421.71310.7870.86491.1441.06931.1461.44131.3946
LVGI 0.97191.0771.03741.0270.84351.23220.83841.14281.55371.1141
TATA -0.1014-0.2249-0.1726-0.0861-0.1061-0.1083-0.1275-0.2986-0.6565-0.1884
M-score -2.73-3.75-3.04-2.09-2.60-3.03-2.98-4.41-5.96-3.69

Apache Corp Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.84181.03951.00411.09731.05750.97161.0131.00221.15751.0775
GMI 1.01821.06911.09841.19851.11751.08511.10741.01271.0240.9459
AQI 0.56470.65450.72880.84261.36671.66310.87850.36770.51140.3452
SGI 0.81440.68570.65750.53080.58540.65240.63120.79710.77770.9703
DEPI 1.16970.44770.84521.42840.6294-0.46880.88210.5991.122-3.9704
SGAI 1.1461.32221.41131.69111.44131.39651.42031.22661.39461.1127
LVGI 1.14281.35831.46661.5781.55371.87161.23751.13611.11410.775
TATA -0.2986-0.4109-0.5724-0.7874-0.6565-0.6838-0.4548-0.3223-0.1884-0.171
M-score -4.41-4.99-5.76-6.71-5.96-6.22-5.08-4.55-3.69-4.05
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