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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 -1.11. The lowest was -6.19. And the median was -2.96.
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 * 0.7219||+||0.528 * 2.6272||+||0.404 * 0.0732||+||0.892 * 0.5551||+||0.115 * 0.8222|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.4622||+||4.679 * -0.6671||-||0.327 * 1.9933|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $116.0 Mil.|
Revenue was 150.174 + 176.857 + 197.496 + 267.799 = $792.3 Mil.
Gross Profit was -26.587 + 2.352 + 38.655 + 63.269 = $77.7 Mil.
Total Current Assets was $420.4 Mil.
Total Assets was $1,327.8 Mil.
Property, Plant and Equipment(Net PPE) was $880.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $180.3 Mil.
Selling, General & Admin. Expense(SGA) was $202.6 Mil.
Total Current Liabilities was $154.5 Mil.
Long-Term Debt was $961.7 Mil.
Net Income was -152.485 + -640.161 + -65.379 + -59.676 = $-917.7 Mil.
Non Operating Income was 0.705 + -5.976 + 0.223 + -4.447 = $-9.5 Mil.
Cash Flow from Operations was -1.548 + -19.64 + 1.466 + -2.664 = $-22.4 Mil.
|Accounts Receivable was $289.5 Mil.
Revenue was 354.802 + 365.798 + 350.595 + 356.141 = $1,427.3 Mil.
Gross Profit was 88.448 + 93.686 + 87.712 + 97.839 = $367.7 Mil.
Total Current Assets was $433.8 Mil.
Total Assets was $2,322.8 Mil.
Property, Plant and Equipment(Net PPE) was $1,235.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $200.7 Mil.
Selling, General & Admin. Expense(SGA) was $249.6 Mil.
Total Current Liabilities was $241.9 Mil.
Long-Term Debt was $737.7 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)|
|=||(115.992 / 792.326)||/||(289.466 / 1427.336)|
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)|
|=||(2.352 / 1427.336)||/||(-26.587 / 792.326)|
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 - (420.426 + 880.032) / 1327.798)||/||(1 - (433.795 + 1235.258) / 2322.763)|
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))|
|=||(200.738 / (200.738 + 1235.258))||/||(180.271 / (180.271 + 880.032))|
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)|
|=||(202.631 / 792.326)||/||(249.646 / 1427.336)|
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)|
|=||((961.7 + 154.483) / 1327.798)||/||((737.691 + 241.858) / 2322.763)|
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|
|=||(-917.701 - -9.495||-||-22.386)||/||1327.798|
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 -6.19 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