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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 -17.73. And the median was -2.70.
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 * 0.7412||+||0.528 * 1.1713||+||0.404 * 0.9963||+||0.892 * 0.8131||+||0.115 * 0.9775|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.4959||+||4.679 * -0.1254||-||0.327 * 1.2838|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $181 Mil.|
Revenue was 197.496 + 267.799 + 354.802 + 365.798 = $1,186 Mil.
Gross Profit was 38.655 + 63.269 + 88.448 + 93.686 = $284 Mil.
Total Current Assets was $521 Mil.
Total Assets was $2,290 Mil.
Property, Plant and Equipment(Net PPE) was $1,138 Mil.
Depreciation, Depletion and Amortization(DDA) was $192 Mil.
Selling, General & Admin. Expense(SGA) was $257 Mil.
Total Current Liabilities was $158 Mil.
Long-Term Debt was $961 Mil.
Net Income was -65.379 + -59.676 + -52.304 + -62.229 = $-240 Mil.
Non Operating Income was 0.223 + -4.447 + -3.485 + -0.36 = $-8 Mil.
Cash Flow from Operations was 1.466 + -2.664 + 38.084 + 18.816 = $56 Mil.
|Accounts Receivable was $301 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 $217 Mil.
Selling, General & Admin. Expense(SGA) was $212 Mil.
Total Current Liabilities was $217 Mil.
Long-Term Debt was $719 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)|
|=||(181.234 / 1185.895)||/||(300.733 / 1458.573)|
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)|
|=||(63.269 / 1458.573)||/||(38.655 / 1185.895)|
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 - (521.378 + 1137.534) / 2289.778)||/||(1 - (452.491 + 1325.508) / 2457.606)|
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))|
|=||(217.296 / (217.296 + 1325.508))||/||(191.506 / (191.506 + 1137.534))|
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)|
|=||(257.253 / 1185.895)||/||(211.519 / 1458.573)|
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)|
|=||((961.08 + 157.939) / 2289.778)||/||((718.704 + 216.843) / 2457.606)|
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|
|=||(-239.588 - -8.069||-||55.702)||/||2289.778|
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 -3.56 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