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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 -5.30. And the median was -2.43.
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 * 1.2137||+||0.528 * 1.9067||+||0.404 * 1.6401||+||0.892 * 0.6203||+||0.115 * 1.0333|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 15.4624||+||4.679 * -0.1347||-||0.327 * 1.3793|
* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $4,360 Mil.|
Revenue was 3833 + 3835 + 4198 + 5082 = $16,948 Mil.
Gross Profit was 171 + 103 + 273 + 526 = $1,073 Mil.
Total Current Assets was $11,760 Mil.
Total Assets was $26,755 Mil.
Property, Plant and Equipment(Net PPE) was $8,741 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,519 Mil.
Selling, General & Admin. Expense(SGA) was $3,501 Mil.
Total Current Liabilities was $3,631 Mil.
Long-Term Debt was $12,163 Mil.
Net Income was 6 + -3208 + -2412 + -28 = $-5,642 Mil.
Non Operating Income was -39 + -31 + -47 + -43 = $-160 Mil.
Cash Flow from Operations was 1041 + -3632 + -171 + 885 = $-1,877 Mil.
|Accounts Receivable was $5,791 Mil.
Revenue was 5582 + 5919 + 7050 + 8770 = $27,321 Mil.
Gross Profit was 543 + 686 + 765 + 1304 = $3,298 Mil.
Total Current Assets was $14,919 Mil.
Total Assets was $30,248 Mil.
Property, Plant and Equipment(Net PPE) was $11,018 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,990 Mil.
Selling, General & Admin. Expense(SGA) was $365 Mil.
Total Current Liabilities was $5,703 Mil.
Long-Term Debt was $7,243 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)|
|=||(4360 / 16948)||/||(5791 / 27321)|
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)|
|=||(3298 / 27321)||/||(1073 / 16948)|
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 - (11760 + 8741) / 26755)||/||(1 - (14919 + 11018) / 30248)|
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))|
|=||(1990 / (1990 + 11018))||/||(1519 / (1519 + 8741))|
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)|
|=||(3501 / 16948)||/||(365 / 27321)|
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)|
|=||((12163 + 3631) / 26755)||/||((7243 + 5703) / 30248)|
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|
|=||(-5642 - -160||-||-1877)||/||26755|
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 -5.12 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