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GuruFocus has detected 2 Warning Signs with Marathon Oil Corp $MRO.
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Marathon Oil Corp (NYSE:MRO)
Beneish M-Score
-3.87 (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.

Marathon Oil Corp has a M-score of -3.87 suggests that the company is not a manipulator.

MRO' s Beneish M-Score Range Over the Past 10 Years
Min: -4.37   Max: 0.55
Current: -3.87

-4.37
0.55

During the past 13 years, the highest Beneish M-Score of Marathon Oil Corp was 0.55. The lowest was -4.37. And the median was -2.70.


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 Marathon Oil 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 * 0.9461+0.528 * 0.8586+0.404 * 1.9936+0.892 * 1.019+0.115 * 0.7194
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.761+4.679 * -0.3383-0.327 * 1.342
=-3.87

* 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 $751 Mil.
Revenue was 1072 + 1389 + 1229 + 1302 = $4,992 Mil.
Gross Profit was 798 + 875 + 665 + 769 = $3,107 Mil.
Total Current Assets was $3,743 Mil.
Total Assets was $24,537 Mil.
Property, Plant and Equipment(Net PPE) was $16,533 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,402 Mil.
Selling, General & Admin. Expense(SGA) was $442 Mil.
Total Current Liabilities was $3,099 Mil.
Long-Term Debt was $5,723 Mil.
Net Income was -4957 + -1371 + -192 + -170 = $-6,690 Mil.
Non Operating Income was 0 + 17 + 0 + 0 = $17 Mil.
Cash Flow from Operations was 596 + 455 + 366 + 178 = $1,595 Mil.
Accounts Receivable was $779 Mil.
Revenue was 570 + 1475 + 1323 + 1531 = $4,899 Mil.
Gross Profit was 234 + 826 + 740 + 818 = $2,618 Mil.
Total Current Assets was $3,268 Mil.
Total Assets was $32,868 Mil.
Property, Plant and Equipment(Net PPE) was $26,737 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,685 Mil.
Selling, General & Admin. Expense(SGA) was $570 Mil.
Total Current Liabilities was $1,526 Mil.
Long-Term Debt was $7,280 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)
=(751 / 4992) / (779 / 4899)
=0.15044071 / 0.15901204
=0.9461

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)
=(2618 / 4899) / (3107 / 4992)
=0.53439477 / 0.62239583
=0.8586

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 - (3743 + 16533) / 24537) / (1 - (3268 + 26737) / 32868)
=0.17365611 / 0.087106
=1.9936

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
=4992 / 4899
=1.019

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))
=(2685 / (2685 + 26737)) / (2402 / (2402 + 16533))
=0.09125824 / 0.12685503
=0.7194

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)
=(442 / 4992) / (570 / 4899)
=0.08854167 / 0.11635028
=0.761

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)
=((5723 + 3099) / 24537) / ((7280 + 1526) / 32868)
=0.35953866 / 0.26792017
=1.342

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
=(-6690 - 17 - 1595) / 24537
=-0.3383

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.

Marathon Oil Corp has a M-score of -3.87 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.

Marathon Oil Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.27720.48022.18242.64690.54971.51610.86860.91311.01321.2552
GMI 1.16861.58031.07660.47230.52980.99580.92441.1051.06180.952
AQI 1.32240.65150.80010.86831.13571.02991.36320.5171.26060.6684
SGI 1.05511.15640.68910.48090.58890.8171.01610.88740.52060.7661
DEPI 1.36150.90910.90011.25020.73121.2370.81290.90960.91041.1563
SGAI 1.05960.6721.32441.1311.63871.2350.98271.10331.73291.0708
LVGI 1.12480.85681.06941.00640.77251.1360.91710.89271.03661.0188
TATA -0.0639-0.0762-0.0883-0.0642-0.105-0.0687-0.0992-0.0687-0.118-0.1039
M-score -2.27-2.92-2.21-2.06-4.01-2.54-2.94-3.11-3.46-3.10

Marathon Oil Corp Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.91310.69910.78660.79521.01321.17881.25661.18841.25520.9461
GMI 1.1051.05161.03581.05741.06181.04641.00430.99380.9520.8586
AQI 0.5170.87740.650.79861.26061.22151.36031.21990.66841.9936
SGI 0.88740.86320.7440.60850.52060.49280.54740.66480.76611.019
DEPI 0.90960.83560.87510.84830.91041.031.06541.16391.15630.7194
SGAI 1.10331.08211.35231.52731.73291.81291.46251.22331.07080.761
LVGI 0.89270.86391.00821.02221.03661.04720.91830.91641.01881.342
TATA -0.0687-0.0788-0.0834-0.0832-0.118-0.1129-0.1003-0.0798-0.1039-0.3383
M-score -3.11-3.26-3.50-3.57-3.46-3.33-3.01-2.89-3.10-3.87
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