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GuruFocus has detected 1 Warning Sign with Devon Energy Corp $DVN.
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Devon Energy Corp (NYSE:DVN)
Beneish M-Score
-2.46 (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.

Devon Energy Corp has a M-score of -2.46 suggests that the company is not a manipulator.

DVN' s Beneish M-Score Range Over the Past 10 Years
Min: -8.1   Max: 6.59
Current: -2.46

-8.1
6.59

During the past 13 years, the highest Beneish M-Score of Devon Energy Corp was 6.59. The lowest was -8.10. And the median was -2.77.


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 Devon Energy 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 * 1.2441+0.528 * 0.8592+0.404 * 1.013+0.892 * 1.1343+0.115 * 1.3787
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9774+4.679 * -0.0688-0.327 * 0.9518
=-2.46

* 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 $1,167 Mil.
Revenue was 3547 + 3350 + 4233 + 2488 = $13,618 Mil.
Gross Profit was 3161 + 2983 + 3878 + 734 = $10,756 Mil.
Total Current Assets was $3,775 Mil.
Total Assets was $26,134 Mil.
Property, Plant and Equipment(Net PPE) was $16,421 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,631 Mil.
Selling, General & Admin. Expense(SGA) was $5,523 Mil.
Total Current Liabilities was $2,470 Mil.
Long-Term Debt was $10,381 Mil.
Net Income was 565 + 331 + 993 + -1570 = $319 Mil.
Non Operating Income was 19 + -104 + -137 + -92 = $-314 Mil.
Cash Flow from Operations was 834 + 536 + 726 + 335 = $2,431 Mil.
Accounts Receivable was $827 Mil.
Revenue was 2126 + 2886 + 3601 + 3393 = $12,006 Mil.
Gross Profit was 1682 + 2407 + 3091 + 968 = $8,148 Mil.
Total Current Assets was $2,950 Mil.
Total Assets was $28,637 Mil.
Property, Plant and Equipment(Net PPE) was $19,264 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,741 Mil.
Selling, General & Admin. Expense(SGA) was $4,982 Mil.
Total Current Liabilities was $2,600 Mil.
Long-Term Debt was $12,195 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)
=(1167 / 13618) / (827 / 12006)
=0.0856954 / 0.06888223
=1.2441

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)
=(8148 / 12006) / (10756 / 13618)
=0.67866067 / 0.78983698
=0.8592

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 - (3775 + 16421) / 26134) / (1 - (2950 + 19264) / 28637)
=0.22721359 / 0.22429025
=1.013

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
=13618 / 12006
=1.1343

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))
=(2741 / (2741 + 19264)) / (1631 / (1631 + 16421))
=0.1245626 / 0.0903501
=1.3787

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)
=(5523 / 13618) / (4982 / 12006)
=0.40556616 / 0.41495919
=0.9774

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)
=((10381 + 2470) / 26134) / ((12195 + 2600) / 28637)
=0.4917349 / 0.51663931
=0.9518

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
=(319 - -314 - 2431) / 26134
=-0.0688

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.

Devon Energy Corp has a M-score of -2.46 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.

Devon Energy Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.1550.59911.60660.80230.99641.08760.75090.70370.9691.4602
GMI 0.980.90291.12960.95761.00761.05811.08870.72541.39920.7741
AQI 0.92050.98761.18450.8780.73010.94910.92231.03361.39471.0631
SGI 1.16331.21970.57841.24021.15140.83011.09431.9850.63690.9279
DEPI 0.95130.72781.2571.12921.07490.89161.04811.06260.59431.4145
SGAI 0.3316-4.23061.73710.70060.90241.42490.335412.60840.98121.3018
LVGI 0.87631.23341.03250.78511.21111.07981.02120.91361.67420.9454
TATA -0.0498-0.338-0.0226-0.0264-0.0367-0.1195-0.1266-0.0839-0.6722-0.1816
M-score -2.32-3.50-2.37-2.51-2.67-3.21-3.09-4.36-5.87-3.05

Devon Energy Corp Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.70370.3580.51370.65370.9691.18191.31531.29681.46021.2441
GMI 0.72540.70170.86920.99371.39921.20140.99290.92080.77410.8592
AQI 1.03360.91161.04241.11081.39471.25851.19341.09011.06311.013
SGI 1.9851.66061.40431.06980.63690.5950.58240.67720.92791.1343
DEPI 1.06260.69680.66550.62760.59430.80590.89011.14841.41451.3787
SGAI 12.608412.22921.60281.17090.98121.30891.91271.62531.30180.9774
LVGI 0.91360.95541.16861.36511.67421.47691.4821.19120.94540.9518
TATA -0.0839-0.1857-0.2725-0.4524-0.6722-0.6202-0.5745-0.3819-0.1816-0.0688
M-score -4.36-5.50-4.09-5.00-5.87-5.60-5.50-4.44-3.05-2.46
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