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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 -3.00 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Ensco PLC was 0.01. The lowest was -3.81. And the median was -2.48.
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 * 1.0594||+||0.528 * 0.9871||+||0.404 * 0.9644||+||0.892 * 1.0346||+||0.115 * 0.9347|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9152||+||4.679 * -0.1125||-||0.327 * 1.1983|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $838 Mil.|
Revenue was 1261.2 + 1203 + 1187 + 1255.6 = $4,907 Mil.
Gross Profit was 729.8 + 627 + 582.6 + 639.9 = $2,579 Mil.
Total Current Assets was $3,030 Mil.
Total Assets was $19,773 Mil.
Property, Plant and Equipment(Net PPE) was $13,128 Mil.
Depreciation, Depletion and Amortization(DDA) was $568 Mil.
Selling, General & Admin. Expense(SGA) was $139 Mil.
Total Current Liabilities was $1,132 Mil.
Long-Term Debt was $5,904 Mil.
Net Income was 429.4 + -1172.7 + 292.5 + 361.4 = $-89 Mil.
Non Operating Income was -3.5 + 2.1 + 1.9 + 2 = $3 Mil.
Cash Flow from Operations was 596 + 572.7 + 416.6 + 547.9 = $2,133 Mil.
|Accounts Receivable was $765 Mil.
Revenue was 1266.2 + 1248.1 + 1149.9 + 1078.7 = $4,743 Mil.
Gross Profit was 647 + 641.3 + 589.1 + 583.7 = $2,461 Mil.
Total Current Assets was $1,517 Mil.
Total Assets was $19,143 Mil.
Property, Plant and Equipment(Net PPE) was $13,997 Mil.
Depreciation, Depletion and Amortization(DDA) was $564 Mil.
Selling, General & Admin. Expense(SGA) was $147 Mil.
Total Current Liabilities was $941 Mil.
Long-Term Debt was $4,744 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(838.3 / 4906.8)||/||(764.9 / 4742.9)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(627 / 4742.9)||/||(729.8 / 4906.8)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (3030.4 + 13127.6) / 19772.5)||/||(1 - (1517.1 + 13997.4) / 19142.9)|
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.
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))|
|=||(564.2 / (564.2 + 13997.4))||/||(567.7 / (567.7 + 13127.6))|
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)|
|=||(138.8 / 4906.8)||/||(146.6 / 4742.9)|
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)|
|=||((5903.9 + 1131.5) / 19772.5)||/||((4743.6 + 940.5) / 19142.9)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(-89.4 - 2.5||-||2133.2)||/||19772.5|
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 -3.00 suggests that the company will not be a manipulator.
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
Ensco PLC Annual Data
Ensco PLC Quarterly Data