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GuruFocus has detected 3 Warning Signs with VAALCO Energy Inc $EGY.
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VAALCO Energy Inc (NYSE:EGY)
Beneish M-Score
-3.99 (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.

VAALCO Energy Inc has a M-score of -3.99 suggests that the company is not a manipulator.

EGY' s Beneish M-Score Range Over the Past 10 Years
Min: -10.17   Max: 675.66
Current: -3.99

-10.17
675.66

During the past 13 years, the highest Beneish M-Score of VAALCO Energy Inc was 675.66. The lowest was -10.17. And the median was -2.81.


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 VAALCO Energy Inc 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 * 0.2375+0.528 * 0.8492+0.404 * 0.7944+0.892 * 0.9575+0.115 * 2.121
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8663+4.679 * -0.1606-0.327 * 1.0171
=-3.99

* 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 $6.50 Mil.
Revenue was 21.266 + 15.326 + 14.635 + 18.847 = $70.07 Mil.
Gross Profit was 13.32 + 3.496 + 7.473 + 11.506 = $35.80 Mil.
Total Current Assets was $38.50 Mil.
Total Assets was $80.00 Mil.
Property, Plant and Equipment(Net PPE) was $26.68 Mil.
Depreciation, Depletion and Amortization(DDA) was $7.98 Mil.
Selling, General & Admin. Expense(SGA) was $10.43 Mil.
Total Current Liabilities was $50.17 Mil.
Long-Term Debt was $6.62 Mil.
Net Income was 4.259 + -2.627 + -15.599 + -0.261 = $-14.23 Mil.
Non Operating Income was -0.213 + -1.482 + -0.149 + -0.363 = $-2.21 Mil.
Cash Flow from Operations was 4.098 + -3.416 + -1.665 + 1.809 = $0.83 Mil.
Accounts Receivable was $28.56 Mil.
Revenue was 10.976 + 17.523 + 17.546 + 27.137 = $73.18 Mil.
Gross Profit was -0.277 + 4.064 + 9.687 + 18.27 = $31.74 Mil.
Total Current Assets was $58.32 Mil.
Total Assets was $116.69 Mil.
Property, Plant and Equipment(Net PPE) was $31.16 Mil.
Depreciation, Depletion and Amortization(DDA) was $29.71 Mil.
Selling, General & Admin. Expense(SGA) was $12.58 Mil.
Total Current Liabilities was $66.44 Mil.
Long-Term Debt was $15.00 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)
=(6.496 / 70.074) / (28.562 / 73.182)
=0.092702 / 0.39028723
=0.2375

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)
=(31.744 / 73.182) / (35.795 / 70.074)
=0.43376787 / 0.51081714
=0.8492

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 - (38.496 + 26.683) / 79.997) / (1 - (58.319 + 31.162) / 116.69)
=0.18523195 / 0.23317337
=0.7944

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
=70.074 / 73.182
=0.9575

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))
=(29.708 / (29.708 + 31.162)) / (7.975 / (7.975 + 26.683))
=0.48805651 / 0.2301056
=2.121

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)
=(10.434 / 70.074) / (12.579 / 73.182)
=0.14889973 / 0.17188653
=0.8663

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)
=((6.621 + 50.165) / 79.997) / ((15 + 66.441) / 116.69)
=0.70985162 / 0.69792613
=1.0171

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
=(-14.228 - -2.207 - 0.826) / 79.997
=-0.1606

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.

VAALCO Energy Inc has a M-score of -3.99 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.

VAALCO Energy Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.41110.41612.4011.19330.14731.23011.35812.76220.43511.697
GMI 1.12140.9421.62910.62830.92791.29531.01660.9694.13720.4315
AQI 0.86141.01160.91140.14884.77461.02460.15515.72831.94830.828
SGI 1.27171.35570.68011.16631.56490.9280.86680.75430.630.7432
DEPI 0.4191.19920.8681.25770.83981.29641.44520.6860.31772.176
SGAI 2.61750.99381.3310.65060.89911.21881.10211.42672.0520.7808
LVGI 0.82691.73370.61430.67410.81451.84340.88431.44673.0641.1699
TATA -0.1302-0.3049-0.1514-0.0315-0.2063-0.3498-0.1045-0.4027-1.5824-0.2569
M-score -2.75-4.37-1.83-2.65-2.18-4.08-3.022.72-9.63-3.52

VAALCO Energy Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 2.7622739.53320.71753.27990.43510.92941.29090.33061.6970.2375
GMI 0.9691.13492.07072.87854.13721.14270.82320.690.43150.8492
AQI 15.72837.12517.798711.99461.94832.49212.96431.06170.8280.7944
SGI 0.75430.76920.52720.52750.630.62090.69860.72110.74320.9575
DEPI 0.6860.61910.61470.44060.31770.35170.40230.60652.1762.121
SGAI 1.42671.55442.09121.60292.0521.51211.51011.60470.78080.8663
LVGI 1.44672.5122.20251.90443.0642.05421.79611.99261.16991.0171
TATA -0.4027-0.6456-0.6372-0.9323-1.5824-1.4175-1.4611-1.3282-0.2569-0.1606
M-score 2.72675.66-3.46-0.20-9.63-9.34-9.03-10.17-3.52-3.99
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