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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.
Key Energy Services Inc has a M-score of -3.33 suggests that the company is not a manipulator.
During the past 11 years, the highest Beneish M-Score of Key Energy Services Inc was -0.72. The lowest was -17.73. And the median was -2.64.
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 * 0.9438||+||0.528 * 1.1058||+||0.404 * 1.0524||+||0.892 * 0.8116||+||0.115 * 0.9809|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1211||+||4.679 * -0.152||-||0.327 * 0.9182|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $332 Mil.|
Revenue was 350.595 + 356.141 + 362.164 + 389.673 = $1,459 Mil.
Gross Profit was 87.712 + 97.839 + 102.283 + 121.376 = $409 Mil.
Total Current Assets was $452 Mil.
Total Assets was $2,458 Mil.
Property, Plant and Equipment(Net PPE) was $1,326 Mil.
Depreciation, Depletion and Amortization(DDA) was $216 Mil.
Selling, General & Admin. Expense(SGA) was $212 Mil.
Total Current Liabilities was $217 Mil.
Long-Term Debt was $719 Mil.
Net Income was -52.196 + -11.899 + -12.518 + -4.848 = $-81 Mil.
Non Operating Income was 2.703 + 0.069 + 0.054 + 0.051 = $3 Mil.
Cash Flow from Operations was 61.574 + 45.694 + 71.625 + 110.337 = $289 Mil.
|Accounts Receivable was $433 Mil.
Revenue was 411.39 + 428.449 + 466.471 + 490.851 = $1,797 Mil.
Gross Profit was 124.288 + 129.267 + 148.918 + 155.052 = $558 Mil.
Total Current Assets was $620 Mil.
Total Assets was $2,732 Mil.
Property, Plant and Equipment(Net PPE) was $1,395 Mil.
Depreciation, Depletion and Amortization(DDA) was $222 Mil.
Selling, General & Admin. Expense(SGA) was $232 Mil.
Total Current Liabilities was $265 Mil.
Long-Term Debt was $868 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)|
|=||(331.776 / 1458.573)||/||(433.136 / 1797.161)|
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)|
|=||(97.839 / 1797.161)||/||(87.712 / 1458.573)|
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 - (452.491 + 1325.508) / 2457.606)||/||(1 - (619.867 + 1394.593) / 2732.437)|
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))|
|=||(222.4 / (222.4 + 1394.593))||/||(216.175 / (216.175 + 1325.508))|
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)|
|=||(211.519 / 1458.573)||/||(232.478 / 1797.161)|
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)|
|=||((718.704 + 216.843) / 2457.606)||/||((867.832 + 265.017) / 2732.437)|
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|
|=||(-81.461 - 2.877||-||289.23)||/||2457.606|
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 -3.33 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