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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 * 0.8326||+||0.528 * 1.0944||+||0.404 * 0.9074||+||0.892 * 0.9977||+||0.115 * 0.9246|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8689||+||4.679 * -0.0743||-||0.327 * 0.9702|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|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.
Net Income was 54 + -643 + 901 + 1203 = $1,515 Mil.
Non Operating Income was -23 + -224 + 41 + 12 = $-194 Mil.
Cash Flow from Operations was 1183 + 812 + 1149 + 838 = $3,982 Mil.
|Accounts Receivable was $6,781 Mil.
Revenue was 8051 + 7348 + 7639 + 7472 = $30,510 Mil.
Gross Profit was 1283 + 1045 + 1238 + 1188 = $4,754 Mil.
Total Current Assets was $14,165 Mil.
Total Assets was $30,484 Mil.
Property, Plant and Equipment(Net PPE) was $11,677 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,012 Mil.
Selling, General & Admin. Expense(SGA) was $338 Mil.
Total Current Liabilities was $5,369 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)|
|=||(5633 / 30440)||/||(6781 / 30510)|
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)|
|=||(765 / 30510)||/||(686 / 30440)|
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 - (15224 + 11153) / 30606)||/||(1 - (14165 + 11677) / 30484)|
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))|
|=||(2012 / (2012 + 11677))||/||(2108 / (2108 + 11153))|
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)|
|=||(293 / 30440)||/||(338 / 30510)|
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)|
|=||((7838 + 5005) / 30606)||/||((7816 + 5369) / 30484)|
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|
|=||(1515 - -194||-||3982)||/||30606|
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 -2.95 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