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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.
During the past 13 years, the highest Beneish M-Score of Halliburton Co was 1.11. The lowest was -6.46. And the median was -2.42.
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 Halliburton Co 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 * 1.3656||+||0.528 * 1.8422||+||0.404 * 1.6167||+||0.892 * 0.6142||+||0.115 * 1.0715|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 20.5481||+||4.679 * -0.0957||-||0.327 * 1.4293|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $4,725 Mil.|
Revenue was 3835 + 4198 + 5082 + 5582 = $18,697 Mil.
Gross Profit was 103 + 273 + 526 + 543 = $1,445 Mil.
Total Current Assets was $12,580 Mil.
Total Assets was $27,737 Mil.
Property, Plant and Equipment(Net PPE) was $8,961 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,561 Mil.
Selling, General & Admin. Expense(SGA) was $3,698 Mil.
Total Current Liabilities was $4,478 Mil.
Long-Term Debt was $12,158 Mil.
Net Income was -3208 + -2412 + -28 + -54 = $-5,702 Mil.
Non Operating Income was -31 + -47 + -43 + -34 = $-155 Mil.
Cash Flow from Operations was -3632 + -171 + 885 + 26 = $-2,892 Mil.
|Accounts Receivable was $5,633 Mil.
Revenue was 5919 + 7050 + 8770 + 8701 = $30,440 Mil.
Gross Profit was 686 + 765 + 1370 + 1513 = $4,334 Mil.
Total Current Assets was $15,224 Mil.
Total Assets was $30,606 Mil.
Property, Plant and Equipment(Net PPE) was $11,153 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,108 Mil.
Selling, General & Admin. Expense(SGA) was $293 Mil.
Total Current Liabilities was $5,005 Mil.
Long-Term Debt was $7,838 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)|
|=||(4725 / 18697)||/||(5633 / 30440)|
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)|
|=||(4334 / 30440)||/||(1445 / 18697)|
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 - (12580 + 8961) / 27737)||/||(1 - (15224 + 11153) / 30606)|
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))|
|=||(2108 / (2108 + 11153))||/||(1561 / (1561 + 8961))|
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)|
|=||(3698 / 18697)||/||(293 / 30440)|
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)|
|=||((12158 + 4478) / 27737)||/||((7838 + 5005) / 30606)|
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|
|=||(-5702 - -155||-||-2892)||/||27737|
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.
Halliburton Co has a M-score of -5.74 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
Halliburton Co Annual Data
Halliburton Co Quarterly Data