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GuruFocus has detected 1 Warning Sign with Ensco PLC $ESV.
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Ensco PLC (NYSE:ESV)
Beneish M-Score
-3.09 (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 -3.09 suggests that the company is not a manipulator.

ESV' s Beneish M-Score Range Over the Past 10 Years
Min: -4.66   Max: -1.02
Current: -3.09

-4.66
-1.02

During the past 13 years, the highest Beneish M-Score of Ensco PLC was -1.02. The lowest was -4.66. And the median was -2.62.


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 * 0.8816+0.528 * 1.016+0.404 * 0.701+0.892 * 0.6833+0.115 * 1.253
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.246+4.679 * -0.0329-0.327 * 0.8261
=-3.09

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

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $358 Mil.
Revenue was 504.6 + 548.2 + 909.6 + 814 = $2,776 Mil.
Gross Profit was 215.6 + 250.1 + 559.4 + 450.3 = $1,475 Mil.
Total Current Assets was $3,279 Mil.
Total Assets was $14,375 Mil.
Property, Plant and Equipment(Net PPE) was $10,919 Mil.
Depreciation, Depletion and Amortization(DDA) was $445 Mil.
Selling, General & Admin. Expense(SGA) was $101 Mil.
Total Current Liabilities was $854 Mil.
Long-Term Debt was $4,943 Mil.
Net Income was 39 + 85.3 + 590.6 + 175.3 = $890 Mil.
Non Operating Income was 4.9 + 18.7 + 261.4 + -1.8 = $283 Mil.
Cash Flow from Operations was 83.5 + 194.4 + 562.9 + 238.7 = $1,080 Mil.
Accounts Receivable was $595 Mil.
Revenue was 828.3 + 1012.2 + 1059 + 1163.9 = $4,063 Mil.
Gross Profit was 413.1 + 578.7 + 556.4 + 645.6 = $2,194 Mil.
Total Current Assets was $2,285 Mil.
Total Assets was $13,611 Mil.
Property, Plant and Equipment(Net PPE) was $11,088 Mil.
Depreciation, Depletion and Amortization(DDA) was $573 Mil.
Selling, General & Admin. Expense(SGA) was $118 Mil.
Total Current Liabilities was $776 Mil.
Long-Term Debt was $5,869 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)
=(358.4 / 2776.4) / (595 / 4063.4)
=0.12908803 / 0.1464291
=0.8816

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)
=(2193.8 / 4063.4) / (1475.4 / 2776.4)
=0.5398927 / 0.53140758
=1.016

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 - (3279.3 + 10919.3) / 14374.5) / (1 - (2285.1 + 11087.8) / 13610.5)
=0.01223695 / 0.01745711
=0.701

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
=2776.4 / 4063.4
=0.6833

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))
=(572.5 / (572.5 + 11087.8)) / (445.3 / (445.3 + 10919.3))
=0.04909822 / 0.03918308
=1.253

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)
=(100.8 / 2776.4) / (118.4 / 4063.4)
=0.03630601 / 0.02913816
=1.246

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)
=((4942.6 + 854.4) / 14374.5) / ((5868.6 + 775.5) / 13610.5)
=0.40328359 / 0.48815988
=0.8261

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
=(890.2 - 283.2 - 1079.5) / 14374.5
=-0.0329

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 -3.09 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

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.95841.09910.85210.74592.23950.77780.87170.98930.76060.8816
GMI 1.00330.98951.09791.12161.15530.87880.9981.00851.00941.016
AQI 1.08390.98930.95580.87592.64710.93880.93560.20590.45530.701
SGI 1.18011.1460.78910.88631.67111.30061.18811.05580.89020.6833
DEPI 1.06461.01191.14071.02761.58250.95390.9560.76930.83811.253
SGAI 1.13040.7891.50741.51781.10230.72180.82980.8511.00831.246
LVGI 10.75290.91320.75964.15310.89860.94981.47111.12060.8261
TATA -0.0580.0014-0.0733-0.0363-0.0085-0.0424-0.0223-0.3714-0.2396-0.0329
M-score -2.61-2.14-3.16-2.98-1.02-2.63-2.52-4.65-4.19-3.09

Ensco PLC Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.9641.01440.94250.79860.87160.76060.89720.76990.69020.8816
GMI 0.9860.99540.97870.971511.00941.03110.99021.02311.016
AQI 0.96440.20590.18650.16330.16610.45530.40260.42540.42820.701
SGI 1.13691.02971.07171.05230.99990.89020.79660.77750.70540.6833
DEPI 0.7620.76930.75010.91060.88150.83810.86960.87560.99311.253
SGAI 0.83280.87260.78590.75940.83941.00831.13171.19851.29351.246
LVGI 1.19831.47111.4891.32581.14641.12061.10660.95730.94930.8261
TATA -0.1045-0.3714-0.3626-0.2682-0.2646-0.2396-0.2359-0.2386-0.2446-0.0329
M-score -2.97-4.66-4.66-4.30-4.21-4.19-4.16-4.28-4.43-3.09
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