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Penn West Petroleum Ltd (NYSE:PWE)
Beneish M-Score
-4.18 (As of Today)

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.

Penn West Petroleum Ltd has a M-score of -4.30 suggests that the company is not a manipulator.

PWE' s Beneish M-Score Range Over the Past 10 Years
Min: -4.18   Max: -1.77
Current: -4.18

-4.18
-1.77

During the past 13 years, the highest Beneish M-Score of Penn West Petroleum Ltd was -1.77. The lowest was -4.18. And the median was -3.07.


Definition

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 Penn West Petroleum Ltd 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 * 1.4614+0.528 * 1.1882+0.404 * 0.3726+0.892 * 0.4869+0.115 * 0.467
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.2027+4.679 * -0.3017-0.327 * 1.3878
=-4.30

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $112 Mil.
Revenue was 220.958214833 + 284.185134931 + 305.701577032 + 282.136630211 = $1,093 Mil.
Gross Profit was 99.9051994458 + 140.208050656 + 140.719773554 + 115.707719131 = $497 Mil.
Total Current Assets was $222 Mil.
Total Assets was $4,320 Mil.
Property, Plant and Equipment(Net PPE) was $3,929 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,804 Mil.
Selling, General & Admin. Expense(SGA) was $76 Mil.
Total Current Liabilities was $457 Mil.
Long-Term Debt was $1,253 Mil.
Net Income was -1171.15146212 + -575.908337102 + -22.6445612616 + -196.544618799 = $-1,966 Mil.
Non Operating Income was -544.009334208 + -95.7334539424 + -22.6445612616 + -133.935647488 = $-796 Mil.
Cash Flow from Operations was 19.6893458762 + 44.4745967134 + -54.1852001617 + 123.632905373 = $134 Mil.
Accounts Receivable was $158 Mil.
Revenue was 449.184876864 + 581.236944873 + 642.659279778 + 571.557155716 = $2,245 Mil.
Gross Profit was 212.452306625 + 320.588502407 + 392.42843952 + 286.228622862 = $1,212 Mil.
Total Current Assets was $356 Mil.
Total Assets was $8,543 Mil.
Property, Plant and Equipment(Net PPE) was $7,294 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,257 Mil.
Selling, General & Admin. Expense(SGA) was $129 Mil.
Total Current Liabilities was $818 Mil.
Long-Term Debt was $1,618 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(112.302194997 / 1092.98155701) / (157.821713493 / 2244.63825723)
=0.10274848 / 0.07031053
=1.4614

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(140.208050656 / 2244.63825723) / (99.9051994458 / 1092.98155701)
=0.53981877 / 0.45429929
=1.1882

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (222.416684898 + 3929.11835485) / 4319.98833224) / (1 - (355.532431495 + 7293.61775928) / 8543.18418314)
=0.03899392 / 0.1046488
=0.3726

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=1092.98155701 / 2244.63825723
=0.4869

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))
=(1256.62472635 / (1256.62472635 + 7293.61775928)) / (1804.25531946 / (1804.25531946 + 3929.11835485))
=0.14696948 / 0.31469348
=0.467

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)
=(75.7091132866 / 1092.98155701) / (129.281806973 / 2244.63825723)
=0.06926843 / 0.05759583
=1.2027

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)
=((1252.82578575 + 456.501130314) / 4319.98833224) / ((1618.10613944 + 817.724592438) / 8543.18418314)
=0.3956786 / 0.28511977
=1.3878

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(-1966.24897928 - -796.3229969 - 133.611647801) / 4319.98833224
=-0.3017

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.

Penn West Petroleum Ltd has a M-score of -4.30 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Penn West Petroleum Ltd Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.88090.6441.9270.90161.03410.81060.90420.76221.5155
GMI 1.01940.90121.53610.85780.93631.0661.08570.85821.2091
AQI 0.95641.69521.11071.27580.8381.01341.10360.60120.3726
SGI 1.3471.75390.5841.20671.19850.95570.74920.83140.4695
DEPI 0.78870.95080.94111.24861.1010.72220.80161.04910.4682
SGAI 1.17681.11172.13181.57320.42281.18571.38640.82661.2275
LVGI 1.3851.08980.92480.86031.14760.85011.0291.09071.3878
TATA -0.1074-0.0672-0.1113-0.013-0.0495-0.0948-0.1296-0.1153-0.319
M-score -2.97-2.28-2.37-2.43-2.54-3.11-3.41-3.62-4.34

Penn West Petroleum Ltd Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.83960.83110.7850.81280.75340.75350.75240.98090.96261.4614
GMI 1.14481.13471.02210.8710.88990.85870.91061.04461.13161.1882
AQI 1.07421.10361.14721.1191.13520.60120.59840.56020.61450.3726
SGI 0.88460.81510.80980.86890.82380.8410.7450.64440.55380.4869
DEPI 0.7790.7820.75360.79240.80681.0450.99470.93640.5390.467
SGAI 1.01491.01331.15310.89370.93490.86580.80980.90290.9251.2027
LVGI 0.84991.0290.93470.85250.91411.09071.21041.21931.35621.3878
TATA -0.1078-0.1298-0.129-0.119-0.1144-0.1114-0.1219-0.1114-0.1838-0.3017
M-score -3.11-3.33-3.41-3.30-3.39-3.61-3.75-3.55-4.02-4.30
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