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GuruFocus has detected 7 Warning Signs with Halliburton Co $HAL.
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Halliburton Co (NYSE:HAL)
Beneish M-Score
-5.12 (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 -5.12 suggests that the company is not a manipulator.

HAL' s Beneish M-Score Range Over the Past 10 Years
Min: -5.3   Max: 1.11
Current: -5.12

-5.3
1.11

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.


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 * 1.2137+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
=-5.12

* 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

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)
=(4360 / 16948) / (5791 / 27321)
=0.25725749 / 0.21196149
=1.2137

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)
=(3298 / 27321) / (1073 / 16948)
=0.120713 / 0.06331131
=1.9067

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 - (11760 + 8741) / 26755) / (1 - (14919 + 11018) / 30248)
=0.2337507 / 0.14252182
=1.6401

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
=16948 / 27321
=0.6203

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))
=0.15298278 / 0.14805068
=1.0333

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)
=0.20657305 / 0.01335969
=15.4624

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)
=0.59031957 / 0.42799524
=1.3793

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
=(-5642 - -160 - -1877) / 26755
=-0.1347

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.


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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.42690.99851.02460.97281.0810.93790.99161.03541.09460.9777
GMI 0.85671.11211.05851.54640.83060.89141.21681.09220.9361.5236
AQI 0.92180.79661.0360.84961.08461.08530.97370.96791.09170.7635
SGI 1.28271.17821.19750.80281.22471.38151.1481.03151.1180.719
DEPI 0.91551.14211.0350.96070.99011.01891.00710.95320.98691.0114
SGAI 0.90690.72710.80370.91430.90330.88820.85251.17390.78440.9526
LVGI 0.92670.86030.97271.0880.88611.04990.92481.25840.96441.2805
TATA -0.0770.0595-0.029-0.0746-0.0175-0.0346-0.0358-0.078-0.0174-0.0881
M-score -3.19-1.96-2.32-2.82-2.29-2.38-2.37-2.87-2.32-3.06

Halliburton Co Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 1.00281.04371.09460.92940.83260.89050.97771.21681.36561.2137
GMI 0.92160.8880.9360.98191.06281.37661.52361.59191.89711.9067
AQI 1.03241.00921.09170.99110.90740.96060.76351.1261.61671.6401
SGI 1.06341.09251.1181.09390.99770.86080.7190.6380.61420.6203
DEPI 0.95650.98030.98690.97220.92460.95671.01141.00831.07151.0333
SGAI 1.06310.9740.78440.770.94891.27720.76690.79218.198815.4624
LVGI 1.23570.96420.96440.96480.97020.98631.28051.37531.42931.3793
TATA -0.0683-0.0434-0.0174-0.0487-0.0743-0.0883-0.0881-0.1242-0.0957-0.1347
M-score -2.86-2.60-2.32-2.65-2.98-2.98-3.03-2.91-5.30-5.12
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