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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 -2.64 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Ensco PLC was 0.13. The lowest was -3.81. And the median was -2.46.
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 * 0.8611||+||0.528 * 1.0443||+||0.404 * 0.9467||+||0.892 * 1.1189||+||0.115 * 0.9854|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8853||+||4.679 * -0.0358||-||0.327 * 0.9571|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $780 Mil.|
Revenue was 1187 + 1255.6 + 1266.2 + 1248.1 = $4,957 Mil.
Gross Profit was 582.6 + 639.9 + 647 + 641.3 = $2,511 Mil.
Total Current Assets was $1,472 Mil.
Total Assets was $19,521 Mil.
Property, Plant and Equipment(Net PPE) was $14,418 Mil.
Depreciation, Depletion and Amortization(DDA) was $610 Mil.
Selling, General & Admin. Expense(SGA) was $147 Mil.
Total Current Liabilities was $953 Mil.
Long-Term Debt was $4,704 Mil.
Net Income was 292.5 + 361.4 + 378.8 + 360.9 = $1,394 Mil.
Non Operating Income was 1.9 + 2 + 34.3 + -0.3 = $38 Mil.
Cash Flow from Operations was 416.6 + 547.9 + 648.2 + 442.1 = $2,055 Mil.
|Accounts Receivable was $809 Mil.
Revenue was 1149.9 + 1085.5 + 1123.5 + 1071.1 = $4,430 Mil.
Gross Profit was 589.1 + 561 + 616.2 + 577.1 = $2,343 Mil.
Total Current Assets was $1,785 Mil.
Total Assets was $18,593 Mil.
Property, Plant and Equipment(Net PPE) was $13,155 Mil.
Depreciation, Depletion and Amortization(DDA) was $548 Mil.
Selling, General & Admin. Expense(SGA) was $149 Mil.
Total Current Liabilities was $845 Mil.
Long-Term Debt was $4,783 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)|
|=||(779.6 / 4956.9)||/||(809.1 / 4430)|
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)|
|=||(639.9 / 4430)||/||(582.6 / 4956.9)|
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 - (1472.4 + 14418.3) / 19521.2)||/||(1 - (1784.9 + 13155.2) / 18592.5)|
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))|
|=||(548.3 / (548.3 + 13155.2))||/||(610.2 / (610.2 + 14418.3))|
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)|
|=||(147.1 / 4956.9)||/||(148.5 / 4430)|
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)|
|=||((4703.7 + 952.9) / 19521.2)||/||((4783.3 + 845.4) / 18592.5)|
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|
|=||(1393.6 - 37.9||-||2054.8)||/||19521.2|
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 -2.64 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