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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 1.13. The lowest was -3.55. And the median was -2.40.
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 * 1.0437||+||0.528 * 0.9221||+||0.404 * 1.0092||+||0.892 * 1.0925||+||0.115 * 0.9803|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9741||+||4.679 * -0.0434||-||0.327 * 0.9642|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $7,555 Mil.|
Revenue was 8701 + 8051 + 7348 + 7639 = $31,739 Mil.
Gross Profit was 1513 + 1283 + 1045 + 1238 = $5,079 Mil.
Total Current Assets was $14,847 Mil.
Total Assets was $31,583 Mil.
Property, Plant and Equipment(Net PPE) was $12,050 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,066 Mil.
Selling, General & Admin. Expense(SGA) was $332 Mil.
Total Current Liabilities was $5,889 Mil.
Long-Term Debt was $7,816 Mil.
Net Income was 1203 + 774 + 622 + 793 = $3,392 Mil.
Non Operating Income was 12 + -24 + -31 + -6 = $-49 Mil.
Cash Flow from Operations was 838 + 1121 + 954 + 1898 = $4,811 Mil.
|Accounts Receivable was $6,626 Mil.
Revenue was 7472 + 7317 + 6974 + 7290 = $29,053 Mil.
Gross Profit was 1188 + 1071 + 974 + 1054 = $4,287 Mil.
Total Current Assets was $12,890 Mil.
Total Assets was $27,948 Mil.
Property, Plant and Equipment(Net PPE) was $10,949 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,834 Mil.
Selling, General & Admin. Expense(SGA) was $312 Mil.
Total Current Liabilities was $4,762 Mil.
Long-Term Debt was $7,816 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)|
|=||(7555 / 31739)||/||(6626 / 29053)|
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)|
|=||(1283 / 29053)||/||(1513 / 31739)|
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 - (14847 + 12050) / 31583)||/||(1 - (12890 + 10949) / 27948)|
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))|
|=||(1834 / (1834 + 10949))||/||(2066 / (2066 + 12050))|
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)|
|=||(332 / 31739)||/||(312 / 29053)|
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)|
|=||((7816 + 5889) / 31583)||/||((7816 + 4762) / 27948)|
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|
|=||(3392 - -49||-||4811)||/||31583|
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 -2.58 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