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GuruFocus has detected 2 Warning Signs with ConocoPhillips $COP.
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ConocoPhillips (NYSE:COP)
Beneish M-Score
-3.00 (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.

ConocoPhillips has a M-score of -3.00 suggests that the company is not a manipulator.

COP' s Beneish M-Score Range Over the Past 10 Years
Min: -4.34   Max: -0.26
Current: -3

-4.34
-0.26

During the past 13 years, the highest Beneish M-Score of ConocoPhillips was -0.26. The lowest was -4.34. And the median was -2.65.


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 ConocoPhillips 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 * 0.8527+0.528 * 0.917+0.404 * 1.1301+0.892 * 0.9702+0.115 * 0.8821
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.7299+4.679 * -0.0832-0.327 * 1.0303
=-3.00

* 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 $3,105 Mil.
Revenue was 7771 + 7254 + 6516 + 5575 = $27,116 Mil.
Gross Profit was 3281 + 2964 + 2171 + 2128 = $10,544 Mil.
Total Current Assets was $10,728 Mil.
Total Assets was $87,973 Mil.
Property, Plant and Equipment(Net PPE) was $54,440 Mil.
Depreciation, Depletion and Amortization(DDA) was $8,794 Mil.
Selling, General & Admin. Expense(SGA) was $694 Mil.
Total Current Liabilities was $7,526 Mil.
Long-Term Debt was $25,340 Mil.
Net Income was 586 + -35 + -1040 + -1071 = $-1,560 Mil.
Non Operating Income was -185 + 352 + -136 + -45 = $-14 Mil.
Cash Flow from Operations was 1790 + 1443 + 1280 + 1259 = $5,772 Mil.
Accounts Receivable was $3,753 Mil.
Revenue was 5015 + 6766 + 7507 + 8660 = $27,948 Mil.
Gross Profit was 1436 + 2494 + 2404 + 3632 = $9,966 Mil.
Total Current Assets was $10,934 Mil.
Total Assets was $99,834 Mil.
Property, Plant and Equipment(Net PPE) was $66,000 Mil.
Depreciation, Depletion and Amortization(DDA) was $9,229 Mil.
Selling, General & Admin. Expense(SGA) was $980 Mil.
Total Current Liabilities was $8,825 Mil.
Long-Term Debt was $27,376 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)
=(3105 / 27116) / (3753 / 27948)
=0.11450804 / 0.1342851
=0.8527

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)
=(9966 / 27948) / (10544 / 27116)
=0.35659081 / 0.38884791
=0.917

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 - (10728 + 54440) / 87973) / (1 - (10934 + 66000) / 99834)
=0.25922726 / 0.22938077
=1.1301

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
=27116 / 27948
=0.9702

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))
=(9229 / (9229 + 66000)) / (8794 / (8794 + 54440))
=0.12267875 / 0.13907075
=0.8821

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)
=(694 / 27116) / (980 / 27948)
=0.02559375 / 0.03506512
=0.7299

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)
=((25340 + 7526) / 87973) / ((27376 + 8825) / 99834)
=0.3735919 / 0.36261194
=1.0303

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
=(-1560 - -14 - 5772) / 87973
=-0.0832

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.

ConocoPhillips has a M-score of -3.00 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.

ConocoPhillips Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.12380.57951.77980.80033.60410.57570.98630.84651.15990.9564
GMI 1.01171.16331.05810.98030.59010.90181.03791.05521.18831.0404
AQI 1.1090.741.0670.87961.01310.87221.00431.00611.02191.1144
SGI 1.03171.26570.6191.30360.33260.93850.93940.95310.55720.7875
DEPI 0.91360.87971.01170.96891.31830.84190.96210.93160.82440.8969
SGAI 0.97020.85040.8290.84051.29721.36240.82190.9032.32690.9634
LVGI 0.8831.28890.97280.96281.0121.00620.940.94921.15281.0987
TATA -0.0719-0.2763-0.0615-0.044-0.0469-0.0465-0.0536-0.0838-0.1239-0.0895
M-score -2.59-4.02-2.29-2.62-1.13-3.33-2.73-3.00-3.50-3.10

ConocoPhillips Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.84650.8010.91730.93031.15991.18511.01161.10170.95640.8527
GMI 1.04451.05221.10981.21941.18831.20781.19871.05771.04040.917
AQI 1.00611.06441.01811.01941.02191.01041.04971.05651.11441.1301
SGI 0.95310.79590.68820.62480.55720.58870.60010.66270.78750.9702
DEPI 0.93160.8910.87910.85250.82440.84360.83810.84310.89690.8821
SGAI 0.9031.02711.15471.51012.32692.33792.17421.57850.96340.7299
LVGI 0.94920.94981.01811.10181.15281.25161.20681.1881.09871.0303
TATA -0.0836-0.0668-0.0713-0.0931-0.1239-0.1204-0.1272-0.1204-0.0895-0.0832
M-score -3.00-3.10-3.15-3.33-3.50-3.46-3.58-3.38-3.10-3.00
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