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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 Key Energy Services Inc was -0.72. The lowest was -17.58. And the median was -2.74.
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 Key Energy Services Inc 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 * 0.7843||+||0.528 * 4.5296||+||0.404 * 0.0488||+||0.892 * 0.4747||+||0.115 * 0.8512|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.4438||+||4.679 * -0.7225||-||0.327 * 2.0614|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $84.9 Mil.|
Revenue was 111.088 + 150.174 + 176.857 + 197.496 = $635.6 Mil.
Gross Profit was 20.49 + -26.587 + 2.352 + 38.655 = $34.9 Mil.
Total Current Assets was $354.3 Mil.
Total Assets was $1,226.0 Mil.
Property, Plant and Equipment(Net PPE) was $854.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $169.6 Mil.
Selling, General & Admin. Expense(SGA) was $181.2 Mil.
Total Current Liabilities was $140.5 Mil.
Long-Term Debt was $954.7 Mil.
Net Income was -81.614 + -152.485 + -640.161 + -65.379 = $-939.6 Mil.
Non Operating Income was 1.099 + 0.645 + -5.976 + 0.223 = $-4.0 Mil.
Cash Flow from Operations was -30.064 + -1.548 + -19.64 + 1.466 = $-49.8 Mil.
|Accounts Receivable was $228.1 Mil.
Revenue was 267.799 + 354.802 + 365.798 + 350.595 = $1,339.0 Mil.
Gross Profit was 63.269 + 88.448 + 93.686 + 87.712 = $333.1 Mil.
Total Current Assets was $380.2 Mil.
Total Assets was $2,222.4 Mil.
Property, Plant and Equipment(Net PPE) was $1,202.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $197.3 Mil.
Selling, General & Admin. Expense(SGA) was $264.4 Mil.
Total Current Liabilities was $184.8 Mil.
Long-Term Debt was $778.3 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)|
|=||(84.929 / 635.615)||/||(228.11 / 1338.994)|
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)|
|=||(333.115 / 1338.994)||/||(34.91 / 635.615)|
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 - (354.254 + 854.576) / 1226.046)||/||(1 - (380.225 + 1202.523) / 2222.4)|
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))|
|=||(197.344 / (197.344 + 1202.523))||/||(169.628 / (169.628 + 854.576))|
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)|
|=||(181.232 / 635.615)||/||(264.424 / 1338.994)|
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)|
|=||((954.719 + 140.502) / 1226.046)||/||((778.287 + 184.79) / 2222.4)|
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|
|=||(-939.639 - -4.009||-||-49.786)||/||1226.046|
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.
Key Energy Services Inc has a M-score of -5.49 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
Key Energy Services Inc Annual Data
Key Energy Services Inc Quarterly Data