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The zones of discrimination for M-Score is as such:
An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator.
An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.
Good Sign:
Beneish M-Score -3.2 no higher than -1.78, which implies that the company is unlikely to be a manipulator.
The historical rank and industry rank for Chesapeake Energy's Beneish M-Score or its related term are showing as below:
During the past 13 years, the highest Beneish M-Score of Chesapeake Energy was 5.16. The lowest was -3.69. And the median was -2.85.
The historical data trend for Chesapeake Energy's Beneish M-Score can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
For the Oil & Gas E&P subindustry, Chesapeake Energy's Beneish M-Score, along with its competitors' market caps and Beneish M-Score data, can be viewed below:
* 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. Note that "N/A" values will not show up in the chart.
For the Oil & Gas industry and Energy sector, Chesapeake Energy's Beneish M-Score distribution charts can be found below:
* The bar in red indicates where Chesapeake Energy's Beneish M-Score falls into.
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 Chesapeake Energy 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 * 0.5737 | + | 0.528 * 1.1035 | + | 0.404 * 1.1351 | + | 0.892 * 0.6795 | + | 0.115 * 1.0312 | |
- | 0.172 * SGAI | + | 4.679 * TATA | - | 0.327 * LVGI | |||||||
- | 0.172 * 0.8813 | + | 4.679 * -0.064204 | - | 0.327 * 0.6203 | |||||||
= | -3.20 |
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
This Year (Dec23) TTM: | Last Year (Dec22) TTM: |
Total Receivables was $626 Mil. Revenue was 1809 + 1512 + 1419 + 3035 = $7,775 Mil. Gross Profit was 1177 + 865 + 96 + 1530 = $3,668 Mil. Total Current Assets was $2,609 Mil. Total Assets was $14,376 Mil. Property, Plant and Equipment(Net PPE) was $10,097 Mil. Depreciation, Depletion and Amortization(DDA) was $1,527 Mil. Selling, General, & Admin. Expense(SGA) was $1,364 Mil. Total Current Liabilities was $1,314 Mil. Long-Term Debt & Capital Lease Obligation was $2,028 Mil. Net Income was 569 + 70 + 391 + 1389 = $2,419 Mil. Non Operating Income was 137 + -12 + 492 + 345 = $962 Mil. Cash Flow from Operations was 470 + 506 + 515 + 889 = $2,380 Mil. |
Total Receivables was $1,606 Mil. Revenue was 4124 + 3164 + 3499 + 656 = $11,443 Mil. Gross Profit was 3288 + 2317 + 1371 + -1019 = $5,957 Mil. Total Current Assets was $2,698 Mil. Total Assets was $15,468 Mil. Property, Plant and Equipment(Net PPE) was $11,187 Mil. Depreciation, Depletion and Amortization(DDA) was $1,753 Mil. Selling, General, & Admin. Expense(SGA) was $2,278 Mil. Total Current Liabilities was $2,704 Mil. Long-Term Debt & Capital Lease Obligation was $3,093 Mil. |
1. DSRI = Days Sales in Receivables Index
Measured as the ratio of Revenue in Total 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) |
= | (626 / 7775) | / | (1606 / 11443) | |
= | 0.080514 | / | 0.140348 | |
= | 0.5737 |
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) | |
= | (5957 / 11443) | / | (3668 / 7775) | |
= | 0.52058 | / | 0.471768 | |
= | 1.1035 |
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 - (2609 + 10097) / 14376) | / | (1 - (2698 + 11187) / 15468) | |
= | 0.116166 | / | 0.10234 | |
= | 1.1351 |
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 | |
= | 7775 | / | 11443 | |
= | 0.6795 |
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)) |
= | (1753 / (1753 + 11187)) | / | (1527 / (1527 + 10097)) | |
= | 0.135471 | / | 0.131366 | |
= | 1.0312 |
Note: If the Depreciation, Depletion and Amortization data is not available, we assume that the depreciation rate is constant and set the Depreciation Index to 1.
6. SGAI = Sales, General and Administrative expenses Index
The ratio of Selling, General, & Admin. Expense(SGA) to Sales 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) |
= | (1364 / 7775) | / | (2278 / 11443) | |
= | 0.175434 | / | 0.199074 | |
= | 0.8813 |
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 in leverage
LVGI | = | ((LTD_t + CurrentLiabilities_t) / TotalAssets_t) | / | ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1) |
= | ((2028 + 1314) / 14376) | / | ((3093 + 2704) / 15468) | |
= | 0.232471 | / | 0.374774 | |
= | 0.6203 |
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 | |
= | (2419 - 962 | - | 2380) | / | 14376 | |
= | -0.064204 |
An M-Score of equal or less than -1.78 suggests that the company is unlikely to be a manipulator. An M-Score of greater than -1.78 signals that the company is likely to be a manipulator.
Chesapeake Energy has a M-score of -3.20 suggests that the company is unlikely to be a manipulator.
Thank you for viewing the detailed overview of Chesapeake Energy's Beneish M-Score provided by GuruFocus.com. Please click on the following links to see related term pages.
Michael Wichterich | director | C/O EXTRACTION OIL & GAS, 370 17TH STREET, SUITE 5300, DENVER CO 80202 |
Dell'osso Domenic J Jr | officer: Exec. Vice President & CFO | 6100 N. WESTERN AVE., OKLAHOMA CITY OK 73118 |
Joshua J. Viets | officer: EVP & COO | 6100 N. WESTERN AVENUE, OKLAHOMA CITY OK 73118 |
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Bx Vine (pub) Aggregator L.p. | 10 percent owner | 345 PARK AVENUE, NEW YORK NY 10154 |
Brookfield Us Inc. | 10 percent owner | BROOKFIELD PLACE, 250 VESEY STREET, 15TH FLOOR, NEW YORK NY 10281-1023 |
Bam Partners Trust | 10 percent owner | 181 BAY STREET, SUITE 300, TORONTO A6 M5J 2T3 |
Ocm Xi Chk Holdings, Llc | 10 percent owner | 333 S. GRAND AVE., 28TH FLOOR, LOS ANGELES CA 90071 |
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Brookfield Public Securities Group Holdings Llc | 10 percent owner | 250 VESEY STREET, 15TH FLOOR, NEW YORK NY 10281 |
Gregory M. Larson | officer: VP-Accounting & Controller | 6100 N. WESTERN AVENUE, OKLAHOMA CITY OK 73118 |
Mohit Singh | officer: EVP & CFO | 6100 N. WESTERN AVENUE, OKLAHOMA CITY OK 73118 |
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