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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 -0.97. The lowest was -5.26. And the median was -2.84.
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 * 0.925||+||0.528 * 1.1639||+||0.404 * 1.0295||+||0.892 * 0.8968||+||0.115 * 1.013|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2554||+||4.679 * -0.1464||-||0.327 * 1.1021|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $289 Mil.|
Revenue was 354.802 + 365.798 + 350.595 + 356.141 = $1,427 Mil.
Gross Profit was 88.448 + 93.686 + 87.712 + 97.839 = $368 Mil.
Total Current Assets was $434 Mil.
Total Assets was $2,333 Mil.
Property, Plant and Equipment(Net PPE) was $1,235 Mil.
Depreciation, Depletion and Amortization(DDA) was $201 Mil.
Selling, General & Admin. Expense(SGA) was $250 Mil.
Total Current Liabilities was $242 Mil.
Long-Term Debt was $748 Mil.
Net Income was -52.304 + -62.229 + -52.196 + -11.899 = $-179 Mil.
Non Operating Income was -3.485 + -0.36 + 2.703 + 0.069 = $-1 Mil.
Cash Flow from Operations was 38.084 + 18.816 + 61.574 + 45.694 = $164 Mil.
|Accounts Receivable was $349 Mil.
Revenue was 362.164 + 389.673 + 411.39 + 428.449 = $1,592 Mil.
Gross Profit was 102.283 + 121.376 + 124.288 + 129.267 = $477 Mil.
Total Current Assets was $506 Mil.
Total Assets was $2,587 Mil.
Property, Plant and Equipment(Net PPE) was $1,366 Mil.
Depreciation, Depletion and Amortization(DDA) was $225 Mil.
Selling, General & Admin. Expense(SGA) was $222 Mil.
Total Current Liabilities was $232 Mil.
Long-Term Debt was $764 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)|
|=||(289.466 / 1427.336)||/||(348.966 / 1591.676)|
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)|
|=||(93.686 / 1591.676)||/||(88.448 / 1427.336)|
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 - (433.795 + 1235.258) / 2333.498)||/||(1 - (506.153 + 1365.646) / 2587.47)|
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))|
|=||(225.297 / (225.297 + 1365.646))||/||(200.738 / (200.738 + 1235.258))|
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)|
|=||(249.646 / 1427.336)||/||(221.753 / 1591.676)|
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)|
|=||((748.426 + 241.858) / 2333.498)||/||((763.981 + 232.344) / 2587.47)|
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|
|=||(-178.628 - -1.073||-||164.168)||/||2333.498|
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 -3.30 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