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Penn West Petroleum Ltd (NYSE:PWE)
Beneish M-Score
-5.11 (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 -4.99 suggests that the company is not a manipulator.

PWE' s Beneish M-Score Range Over the Past 10 Years
Min: -5.11   Max: -1.33
Current: -5.11

-5.11
-1.33

During the past 13 years, the highest Beneish M-Score of Penn West Petroleum Ltd was -1.33. The lowest was -5.11. And the median was -2.90.


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 * 1.2921+0.528 * 1.0534+0.404 * 0.2349+0.892 * 0.486+0.115 * 0.3715
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.3824+4.679 * -0.3838-0.327 * 1.3166
=-4.99

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $100.0 Mil.
Revenue was 122.537614394 + 150.461212763 + 220.958214833 + 284.185134931 = $778.1 Mil.
Gross Profit was 51.1865984179 + 65.0234386814 + 99.9051994458 + 140.208050656 = $356.3 Mil.
Total Current Assets was $1,079.6 Mil.
Total Assets was $3,795.6 Mil.
Property, Plant and Equipment(Net PPE) was $2,626.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,868.9 Mil.
Selling, General & Admin. Expense(SGA) was $61.6 Mil.
Total Current Liabilities was $783.3 Mil.
Long-Term Debt was $621.2 Mil.
Net Income was -102.373196836 + -75.6086496295 + -1171.15146212 + -575.908337102 = $-1,925.0 Mil.
Non Operating Income was 36.4510625097 + 68.0477846666 + -544.009334208 + -95.7334539424 = $-535.2 Mil.
Cash Flow from Operations was -43.431053203 + 46.121276274 + 19.6893458762 + 44.4745967134 = $66.9 Mil.
Accounts Receivable was $159.3 Mil.
Revenue was 283.05701577 + 287.68426058 + 449.184876864 + 581.236944873 = $1,601.2 Mil.
Gross Profit was 118.075212293 + 121.255349501 + 212.452306625 + 320.588502407 = $772.4 Mil.
Total Current Assets was $338.1 Mil.
Total Assets was $7,581.9 Mil.
Property, Plant and Equipment(Net PPE) was $6,478.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,183.4 Mil.
Selling, General & Admin. Expense(SGA) was $91.7 Mil.
Total Current Liabilities was $606.6 Mil.
Long-Term Debt was $1,524.5 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)
=(100.046533271 / 778.142176921) / (159.320663162 / 1601.16309809)
=0.12857102 / 0.09950308
=1.2921

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)
=(772.371370825 / 1601.16309809) / (356.323287201 / 778.142176921)
=0.48238145 / 0.4579154
=1.0534

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 - (1079.5718939 + 2626.02760974) / 3795.56382814) / (1 - (338.050950263 + 6478.77072382) / 7581.88435099)
=0.02370249 / 0.10090667
=0.2349

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
=778.142176921 / 1601.16309809
=0.486

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))
=(1183.39396643 / (1183.39396643 + 6478.77072382)) / (1868.89405757 / (1868.89405757 + 2626.02760974))
=0.15444643 / 0.415779
=0.3715

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)
=(61.6006799765 / 778.142176921) / (91.6940327888 / 1601.16309809)
=0.07916378 / 0.05726714
=1.3824

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)
=((621.219171708 + 783.310066698) / 3795.56382814) / ((1524.46421351 + 606.550748079) / 7581.88435099)
=0.37004495 / 0.28106667
=1.3166

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
=(-1925.04164568 - -535.243940975 - 66.8541656605) / 3795.56382814
=-0.3838

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 -4.99 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 -0.1074-0.0804-0.1229-0.013-0.0423-0.0948-0.1296-0.1153-0.319
M-score -2.97-2.34-2.42-2.43-2.51-3.11-3.41-3.62-4.34

Penn West Petroleum Ltd Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.7850.81280.75340.75350.75030.99130.97521.48461.39811.2921
GMI 1.02210.8710.88990.85870.90831.05651.14921.21141.1841.0534
AQI 1.14721.1191.13520.60120.59840.56020.61450.37260.24010.2349
SGI 0.80980.86890.82380.8410.74720.63760.54660.47930.47870.486
DEPI 0.75360.79240.80681.0450.99960.94660.54240.46970.46870.3715
SGAI 1.15310.89370.93490.86580.80750.91250.93711.22181.39891.3824
LVGI 0.93470.85250.91411.09071.21041.21931.35621.38781.28491.3166
TATA -0.129-0.119-0.1144-0.1114-0.1214-0.1262-0.2016-0.3278-0.3354-0.3838
M-score -3.41-3.30-3.39-3.61-3.75-3.61-4.09-4.40-4.58-4.99
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