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GuruFocus has detected 5 Warning Signs with Ensco PLC $ESV.
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Ensco PLC (NYSE:ESV)
Beneish M-Score
-4.43 (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.

Ensco PLC has a M-score of -4.43 suggests that the company is not a manipulator.

ESV' s Beneish M-Score Range Over the Past 10 Years
Min: -4.66   Max: 0.02
Current: -4.43

-4.66
0.02

During the past 13 years, the highest Beneish M-Score of Ensco PLC was 0.02. The lowest was -4.66. And the median was -2.56.


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 Ensco PLC 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 * 0.6902+0.528 * 1.0231+0.404 * 0.4282+0.892 * 0.7054+0.115 * 0.9828
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.2935+4.679 * -0.2454-0.327 * 0.9493
=-4.43

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

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $356 Mil.
Revenue was 548.2 + 909.6 + 814 + 828.3 = $3,100 Mil.
Gross Profit was 250.1 + 559.4 + 450.3 + 413.1 = $1,673 Mil.
Total Current Assets was $2,466 Mil.
Total Assets was $13,602 Mil.
Property, Plant and Equipment(Net PPE) was $10,960 Mil.
Depreciation, Depletion and Amortization(DDA) was $465 Mil.
Selling, General & Admin. Expense(SGA) was $106 Mil.
Total Current Liabilities was $590 Mil.
Long-Term Debt was $4,677 Mil.
Net Income was 85.3 + 590.6 + 175.3 + -2471.8 = $-1,621 Mil.
Non Operating Income was 18.7 + 261.4 + -1.8 + 7 = $285 Mil.
Cash Flow from Operations was 194.4 + 562.9 + 238.7 + 436 = $1,432 Mil.
Accounts Receivable was $731 Mil.
Revenue was 1012.2 + 1059 + 1163.9 + 1159.8 = $4,395 Mil.
Gross Profit was 578.7 + 556.4 + 645.6 + 645.8 = $2,427 Mil.
Total Current Assets was $2,413 Mil.
Total Assets was $16,441 Mil.
Property, Plant and Equipment(Net PPE) was $13,529 Mil.
Depreciation, Depletion and Amortization(DDA) was $563 Mil.
Selling, General & Admin. Expense(SGA) was $117 Mil.
Total Current Liabilities was $803 Mil.
Long-Term Debt was $5,903 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)
=(355.7 / 3100.1) / (730.6 / 4394.9)
=0.11473823 / 0.16623814
=0.6902

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)
=(2426.5 / 4394.9) / (1672.9 / 3100.1)
=0.55211723 / 0.53962775
=1.0231

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 - (2465.7 + 10959.7) / 13602.3) / (1 - (2412.6 + 13528.9) / 16440.8)
=0.01300515 / 0.03036957
=0.4282

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
=3100.1 / 4394.9
=0.7054

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))
=(563.1 / (563.1 + 13528.9)) / (464.5 / (464.5 + 10959.7))
=0.03995884 / 0.0406593
=0.9828

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)
=(106.3 / 3100.1) / (116.5 / 4394.9)
=0.03428922 / 0.026508
=1.2935

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)
=((4677 + 590.2) / 13602.3) / ((5903.3 + 803.1) / 16440.8)
=0.38722863 / 0.40791202
=0.9493

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
=(-1620.6 - 285.3 - 1432) / 13602.3
=-0.2454

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.

Ensco PLC has a M-score of -4.43 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.

Ensco PLC Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.73610.95841.09910.85210.74592.23950.77780.87170.98930.7606
GMI 0.82351.00330.98951.09791.12161.15530.87880.9981.00851.0094
AQI 0.85891.08390.98930.95580.87592.64710.93880.93560.20590.4553
SGI 1.71111.18011.1460.78910.88631.67111.30061.18811.05580.8902
DEPI 0.9791.06461.01191.14071.02761.58250.95390.9560.78030.8282
SGAI 0.81451.13040.7891.50741.51781.10230.72180.82980.8511.0083
LVGI 0.818910.75290.91320.75964.15310.89860.94981.47111.1206
TATA -0.0468-0.0580.0014-0.0733-0.0363-0.0085-0.0424-0.0223-0.3716-0.2404
M-score -2.37-2.61-2.14-3.16-2.98-1.02-2.63-2.52-4.65-4.20

Ensco PLC Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 0.8050.9641.01440.94250.79860.87160.76060.89720.76990.6902
GMI 1.01210.9860.99540.97870.971511.00941.03110.99021.0231
AQI 1.02410.96440.20590.18650.16330.16610.45530.40260.42540.4282
SGI 1.13821.13691.02971.07171.05230.99990.89020.79660.77750.7054
DEPI 0.8040.7620.78030.76080.92350.89340.82820.85960.86560.9828
SGAI 0.86390.83280.87260.78590.75940.83941.00831.13171.19851.2935
LVGI 1.05661.19831.47111.4891.32581.14641.12061.10660.95730.9493
TATA -0.1217-0.1045-0.3716-0.3628-0.2684-0.2648-0.2404-0.2367-0.2394-0.2454
M-score -3.11-2.97-4.66-4.66-4.30-4.21-4.20-4.16-4.28-4.43
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