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GuruFocus has detected 7 Warning Signs with Huntsman Corp $HUN.
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Huntsman Corp (NYSE:HUN)
Beneish M-Score
-2.89 (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.

Huntsman Corp has a M-score of -2.89 suggests that the company is not a manipulator.

HUN' s Beneish M-Score Range Over the Past 10 Years
Min: -4.16   Max: 89.33
Current: -2.89

-4.16
89.33

During the past 13 years, the highest Beneish M-Score of Huntsman Corp was 89.33. The lowest was -4.16. And the median was -2.71.


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 Huntsman 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 * 0.9882+0.528 * 1.0191+0.404 * 0.9672+0.892 * 0.9708+0.115 * 0.881
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0129+4.679 * -0.079-0.327 * 0.9588
=-2.89

* 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 $1,508 Mil.
Revenue was 2469 + 2395 + 2363 + 2544 = $9,771 Mil.
Gross Profit was 466 + 407 + 398 + 457 = $1,728 Mil.
Total Current Assets was $3,835 Mil.
Total Assets was $9,488 Mil.
Property, Plant and Equipment(Net PPE) was $4,186 Mil.
Depreciation, Depletion and Amortization(DDA) was $438 Mil.
Selling, General & Admin. Expense(SGA) was $943 Mil.
Total Current Liabilities was $1,855 Mil.
Long-Term Debt was $4,161 Mil.
Net Income was 76 + 128 + 55 + 87 = $346 Mil.
Non Operating Income was 2 + 2 + -2 + 1 = $3 Mil.
Cash Flow from Operations was 93 + 240 + 405 + 355 = $1,093 Mil.
Accounts Receivable was $1,572 Mil.
Revenue was 2355 + 2332 + 2638 + 2740 = $10,065 Mil.
Gross Profit was 416 + 376 + 473 + 549 = $1,814 Mil.
Total Current Assets was $3,830 Mil.
Total Assets was $9,840 Mil.
Property, Plant and Equipment(Net PPE) was $4,437 Mil.
Depreciation, Depletion and Amortization(DDA) was $404 Mil.
Selling, General & Admin. Expense(SGA) was $959 Mil.
Total Current Liabilities was $1,782 Mil.
Long-Term Debt was $4,725 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)
=(1508 / 9771) / (1572 / 10065)
=0.15433425 / 0.1561848
=0.9882

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)
=(1814 / 10065) / (1728 / 9771)
=0.18022851 / 0.17684986
=1.0191

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 - (3835 + 4186) / 9488) / (1 - (3830 + 4437) / 9840)
=0.15461636 / 0.15985772
=0.9672

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
=9771 / 10065
=0.9708

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))
=(404 / (404 + 4437)) / (438 / (438 + 4186))
=0.08345383 / 0.09472318
=0.881

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)
=(943 / 9771) / (959 / 10065)
=0.09651008 / 0.09528068
=1.0129

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)
=((4161 + 1855) / 9488) / ((4725 + 1782) / 9840)
=0.63406408 / 0.66128049
=0.9588

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
=(346 - 3 - 1093) / 9488
=-0.079

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.

Huntsman Corp has a M-score of -2.89 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.

Huntsman Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.94420.68681.48741.20270.85221.00630.69381.12121.3191.0562
GMI 1.01571.27680.87980.89040.96320.90191.14910.95460.92371.0327
AQI 1.2840.90570.77511.12360.99560.91271.14231.01991.17250.9868
SGI 1.0671.05340.75041.20681.21310.9970.99031.0450.88950.9377
DEPI 1.04061.00560.88071.10570.93431.04520.98621.14721.110.8853
SGAI 1.06840.95731.28430.83940.88181.03571.00020.98941.13341.0187
LVGI 1.02470.97790.98871.00530.98460.98061.0021.04341.01190.9659
TATA 0.0123-0.1148-0.20680.0282-0.014-0.0382-0.0587-0.0378-0.0466-0.0833
M-score -2.31-3.13-3.44-1.95-2.49-2.74-2.91-2.52-2.49-2.87

Huntsman Corp Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.12121.91871.42771.50971.3191.06861.01621.02231.05620.9882
GMI 0.95460.99040.96110.9610.92370.9331.00771.02491.03271.0191
AQI 1.01991.14961.21291.21731.17251.06481.02441.06830.98680.9672
SGI 1.0451.02520.98880.96350.88950.8820.8840.87870.93770.9708
DEPI 1.14721.21961.31091.29211.111.07070.97910.94690.88530.881
SGAI 0.98941.02291.05361.09941.13341.09721.07221.06071.01871.0129
LVGI 1.04341.07491.05611.06011.01190.97270.97840.9730.96590.9588
TATA -0.0378-0.0519-0.0685-0.0679-0.0466-0.0473-0.0652-0.0864-0.0833-0.079
M-score -2.52-1.80-2.34-2.30-2.49-2.75-2.87-2.94-2.87-2.89
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