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GuruFocus has detected 6 Warning Signs with Halliburton Co $HAL.
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Halliburton Co (NYSE:HAL)
Beneish M-Score
-4.38 (As of Today)

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.

Halliburton Co has a M-score of -4.38 suggests that the company is not a manipulator.

HAL' s Beneish M-Score Range Over the Past 10 Years
Min: -4.38   Max: 0.09
Current: -4.38

-4.38
0.09

During the past 13 years, the highest Beneish M-Score of Halliburton Co was 0.09. The lowest was -4.38. And the median was -2.41.


Definition

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 * 1.0973+0.528 * 1.9607+0.404 * 1.9541+0.892 * 0.6722+0.115 * 0.8781
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 11.8847+4.679 * -0.1427-0.327 * 1.1095
=-4.38

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $3,922 Mil.
Revenue was 4021 + 3833 + 3835 + 4198 = $15,887 Mil.
Gross Profit was 317 + 171 + 103 + 273 = $864 Mil.
Total Current Assets was $11,677 Mil.
Total Assets was $27,000 Mil.
Property, Plant and Equipment(Net PPE) was $8,532 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,503 Mil.
Selling, General & Admin. Expense(SGA) was $3,747 Mil.
Total Current Liabilities was $4,023 Mil.
Long-Term Debt was $12,214 Mil.
Net Income was -149 + 6 + -3208 + -2412 = $-5,763 Mil.
Non Operating Income was -91 + -39 + -31 + -47 = $-208 Mil.
Cash Flow from Operations was 1059 + 1041 + -3632 + -171 = $-1,703 Mil.
Accounts Receivable was $5,317 Mil.
Revenue was 5082 + 5582 + 5919 + 7050 = $23,633 Mil.
Gross Profit was 526 + 543 + 686 + 765 = $2,520 Mil.
Total Current Assets was $20,070 Mil.
Total Assets was $36,942 Mil.
Property, Plant and Equipment(Net PPE) was $12,117 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,835 Mil.
Selling, General & Admin. Expense(SGA) was $469 Mil.
Total Current Liabilities was $5,337 Mil.
Long-Term Debt was $14,687 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(3922 / 15887) / (5317 / 23633)
=0.24686851 / 0.22498202
=1.0973

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(2520 / 23633) / (864 / 15887)
=0.10663056 / 0.05438409
=1.9607

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (11677 + 8532) / 27000) / (1 - (20070 + 12117) / 36942)
=0.25151852 / 0.12871528
=1.9541

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=15887 / 23633
=0.6722

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))
=(1835 / (1835 + 12117)) / (1503 / (1503 + 8532))
=0.13152236 / 0.14977578
=0.8781

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)
=(3747 / 15887) / (469 / 23633)
=0.23585321 / 0.01984513
=11.8847

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)
=((12214 + 4023) / 27000) / ((14687 + 5337) / 36942)
=0.60137037 / 0.54203887
=1.1095

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(-5763 - -208 - -1703) / 27000
=-0.1427

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 -4.38 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Halliburton Co Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.99851.02460.97281.0810.93790.99161.03541.09460.97771.0973
GMI 1.11211.05851.54640.83060.89141.21681.09220.90291.57951.9607
AQI 0.79661.0360.84961.08461.08530.97370.96791.09170.8211.9541
SGI 1.17821.19750.80281.22471.38151.1481.03151.1180.7190.6722
DEPI 1.14211.0350.96070.99011.01891.00710.95320.98691.10710.8781
SGAI 0.72710.80370.91430.90330.88820.85251.17390.83272.279212.5477
LVGI 0.86030.97271.0880.88611.04990.92481.25840.96441.2791.1095
TATA 0.0595-0.029-0.0746-0.0175-0.0346-0.0358-0.078-0.0174-0.0881-0.1427
M-score -1.96-2.32-2.82-2.29-2.38-2.37-2.87-2.34-3.23-4.49

Halliburton Co Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.04371.09460.92940.83260.89050.97771.21681.36561.21371.0973
GMI 0.8880.90290.94531.0181.29931.57951.65351.98042.021.9607
AQI 1.00921.09170.99110.90740.96060.8211.1261.61671.64011.9541
SGI 1.09251.1181.09390.99770.86080.7190.6380.61420.62030.6722
DEPI 0.98030.98690.97220.92460.95671.10711.00831.07151.03330.8781
SGAI 0.9740.83270.81891.00231.34022.10422.348518.713216.032111.8847
LVGI 0.96420.96440.96480.97020.98631.2791.37531.42931.37931.1095
TATA -0.0434-0.0174-0.0487-0.0743-0.0883-0.0881-0.1242-0.0957-0.1347-0.1427
M-score -2.60-2.34-2.68-3.01-3.03-3.20-3.14-5.35-5.16-4.38
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