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Centennial Resource Development Inc  (NAS:CDEV) Beneish M-Score: -2.16 (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.

Centennial Resource Development Inc has a M-score of -2.16 signals that the company is a manipulator.

NAS:CDEV' s Beneish M-Score Range Over the Past 10 Years
Min: -2.39   Max: 3.81
Current: -2.16

-2.39
3.81

During the past 5 years, the highest Beneish M-Score of Centennial Resource Development Inc was 3.81. The lowest was -2.39. And the median was 0.00.


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

Centennial Resource Development Inc Annual Data

Dec14 Dec15 Dec16 Dec17 Dec18
Beneish M-Score 0.00 0.00 0.00 1.38 -2.39

Centennial Resource Development Inc Quarterly Data

Dec14 Dec15 Mar16 Jun16 Sep16 Dec16 Mar17 Jun17 Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19
Beneish M-Score Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 3.56 3.81 -1.38 -2.39 -2.16

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.


Centennial Resource Development Inc Distribution

* The bar in red indicates where Centennial Resource Development Inc's Beneish M-Score falls into.



Calculation

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Altman Z-Score) or business trend (Piotroski 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 Centennial Resource Development 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 * 0.7586+0.528 * 1.1623+0.404 * 2.7543+0.892 * 1.5217+0.115 * 0.693
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8282+4.679 * -0.1057-0.327 * 1.6669
=-2.16

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar19) TTM:Last Year (Mar18) TTM:
Accounts Receivable was USD 113.9 Mil.
Revenue was 214.569 + 222.504 + 234.88 + 217.763 = USD 889.7 Mil.
Gross Profit was 88.149 + 96.272 + 127.751 + 123.635 = USD 435.8 Mil.
Total Current Assets was USD 214.4 Mil.
Total Assets was USD 4,478.5 Mil.
Property, Plant and Equipment(Net PPE) was USD 4,194.7 Mil.
Depreciation, Depletion and Amortization(DDA) was USD 357.0 Mil.
Selling, General, & Admin. Expense(SGA) was USD 67.3 Mil.
Total Current Liabilities was USD 274.4 Mil.
Long-Term Debt & Capital Lease Obligation was USD 880.9 Mil.
Net Income was -8.112 + 30.98 + 39.288 + 63.541 = USD 125.7 Mil.
Non Operating Income was -37.011 + 0.188 + -18.118 + 14.758 = USD -40.2 Mil.
Cash Flow from Operations was 101.028 + 175.316 + 170.793 + 192.076 = USD 639.2 Mil.
Accounts Receivable was USD 98.7 Mil.
Revenue was 215.898 + 166.13 + 111.611 + 91.064 = USD 584.7 Mil.
Gross Profit was 133.612 + 92.937 + 57.851 + 48.491 = USD 332.9 Mil.
Total Current Assets was USD 166.3 Mil.
Total Assets was USD 3,692.6 Mil.
Property, Plant and Equipment(Net PPE) was USD 3,505.4 Mil.
(DDA) was USD 201.5 Mil.
Selling, General, & Admin. Expense(SGA) was USD 53.4 Mil.
Total Current Liabilities was USD 180.5 Mil.
Long-Term Debt & Capital Lease Obligation was USD 390.9 Mil.




1. DSRI = Days Sales in Receivables Index

Measured as the ratio of Revenue in Accounts Receivable 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)
=(113.93 / 889.716) / (98.702 / 584.703)
=0.1280521 / 0.16880707
=0.7586

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)
=(332.891 / 584.703) / (435.807 / 889.716)
=0.56933349 / 0.48982709
=1.1623

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 Property, Plant and Equipment to Total Assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (214.408 + 4194.672) / 4478.546) / (1 - (166.324 + 3505.444) / 3692.563)
=0.01551084 / 0.00563159
=2.7543

4. SGI = Sales Growth Index

Ratio of Revenue 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
=889.716 / 584.703
=1.5217

5. DEPI = Depreciation Index

Measured as the ratio of the rate of Depreciation, Depletion and Amortization 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))
=(201.478 / (201.478 + 3505.444)) / (357.01 / (357.01 + 4194.672))
=0.05435183 / 0.07843474
=0.693

6. SGAI = Sales, General and Administrative expenses Index

The ratio of c 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)
=(67.343 / 889.716) / (53.436 / 584.703)
=0.07569045 / 0.09138999
=0.8282

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)
=((880.855 + 274.435) / 4478.546) / ((390.921 + 180.531) / 3692.563)
=0.25796095 / 0.15475755
=1.6669

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
=(125.697 - -40.183 - 639.213) / 4478.546
=-0.1057

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.

Centennial Resource Development Inc has a M-score of -2.16 signals that the company is likely to be a manipulator.


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