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GuruFocus has detected 2 Warning Signs with Cimarex Energy Co $XEC.
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Cimarex Energy Co (NYSE:XEC)
Beneish M-Score
-3.33 (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.

Cimarex Energy Co has a M-score of -3.33 suggests that the company is not a manipulator.

XEC' s Beneish M-Score Range Over the Past 10 Years
Min: -6.72   Max: 3.52
Current: -3.33

-6.72
3.52

During the past 13 years, the highest Beneish M-Score of Cimarex Energy Co was 3.52. The lowest was -6.72. And the median was -3.05.


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 Cimarex Energy Co 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 * 1.0243+0.528 * 0.8909+0.404 * 1.1319+0.892 * 1.0989+0.115 * 1.3272
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0156+4.679 * -0.1972-0.327 * 1.2077
=-3.33

* 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 $69 Mil.
Revenue was 447.176 + 382.155 + 335.717 + 298.873 = $1,464 Mil.
Gross Profit was 321.305 + 271.596 + 226.13 + 189.732 = $1,009 Mil.
Total Current Assets was $949 Mil.
Total Assets was $4,394 Mil.
Property, Plant and Equipment(Net PPE) was $2,779 Mil.
Depreciation, Depletion and Amortization(DDA) was $378 Mil.
Selling, General & Admin. Expense(SGA) was $103 Mil.
Total Current Liabilities was $507 Mil.
Long-Term Debt was $1,489 Mil.
Net Income was 130.972 + 60.436 + -12.818 + -270.29 = $-92 Mil.
Non Operating Income was 2.21 + 3.218 + 3.828 + 2.011 = $11 Mil.
Cash Flow from Operations was 249.514 + 169.894 + 215.627 + 128.299 = $763 Mil.
Accounts Receivable was $62 Mil.
Revenue was 240.6 + 311.279 + 356.055 + 424.283 = $1,332 Mil.
Gross Profit was 115.375 + 171.794 + 232.002 + 298.664 = $818 Mil.
Total Current Assets was $931 Mil.
Total Assets was $4,901 Mil.
Property, Plant and Equipment(Net PPE) was $3,314 Mil.
Depreciation, Depletion and Amortization(DDA) was $625 Mil.
Selling, General & Admin. Expense(SGA) was $93 Mil.
Total Current Liabilities was $357 Mil.
Long-Term Debt was $1,486 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)
=(69.324 / 1463.921) / (61.591 / 1332.217)
=0.04735501 / 0.04623196
=1.0243

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)
=(817.835 / 1332.217) / (1008.763 / 1463.921)
=0.61389023 / 0.68908295
=0.8909

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 - (949.227 + 2778.87) / 4393.999) / (1 - (931.09 + 3313.969) / 4901.261)
=0.15154805 / 0.13388432
=1.1319

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
=1463.921 / 1332.217
=1.0989

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))
=(625.318 / (625.318 + 3313.969)) / (377.528 / (377.528 + 2778.87))
=0.15873888 / 0.11960722
=1.3272

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)
=(103.321 / 1463.921) / (92.579 / 1332.217)
=0.07057826 / 0.06949243
=1.0156

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)
=((1488.5 + 507.322) / 4393.999) / ((1486.211 + 357.092) / 4901.261)
=0.4542154 / 0.3760875
=1.2077

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
=(-91.7 - 11.267 - 763.334) / 4393.999
=-0.1972

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.

Cimarex Energy Co has a M-score of -3.33 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.

Cimarex Energy Co Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.9110.59681.71640.85391.0610.91230.98670.92260.91361.4076
GMI 1.00320.9671.10090.92171.0261.0280.99381.04321.18941.0056
AQI 0.91.26311.21460.78280.74190.8790.86130.82111.84191.1945
SGI 1.12941.37670.51251.5981.08940.9241.23021.21330.59920.8656
DEPI 0.95340.64811.52811.14621.06740.92970.990.93120.49761.4864
SGAI 1.21550.59571.81930.74850.96661.2870.97690.86391.63561.2065
LVGI 1.02861.49310.89390.8720.96351.16131.00091.17091.55171.1782
TATA -0.1248-0.5482-0.2818-0.1297-0.1441-0.1336-0.1077-0.1288-0.6976-0.2511
M-score -3.12-5.12-3.48-2.72-3.08-3.40-2.85-3.05-6.09-3.36

Cimarex Energy Co Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.92261.62160.95663.70030.91360.80941.14080.26861.40761.0243
GMI 1.04321.0821.10161.13911.18941.20021.22071.1551.00560.8909
AQI 0.82110.9821.10321.35541.84191.55141.61791.35191.19451.1319
SGI 1.21331.00690.8530.69930.59920.60940.61150.70630.86561.0989
DEPI 0.93120.83790.69710.64770.49760.69310.83071.10681.48641.3272
SGAI 0.86390.95031.18491.44211.63561.63661.82631.57011.20651.0156
LVGI 1.17091.13460.96391.16711.55171.43971.57921.35911.17821.2077
TATA -0.1288-0.1828-0.267-0.4141-0.6976-0.6267-0.5761-0.4123-0.2511-0.1972
M-score -3.05-2.78-3.86-2.16-6.09-5.90-5.38-5.32-3.36-3.33
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