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Penn West Petroleum Ltd (NYSE:PWE)
Beneish M-Score
-3.28 (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 -3.20 suggests that the company is not a manipulator.

PWE' s 10-Year Beneish M-Score Range
Min: -3.32   Max: -1.31
Current: -3.28

-3.32
-1.31

During the past 13 years, the highest Beneish M-Score of Penn West Petroleum Ltd was -1.31. The lowest was -3.32. And the median was -2.79.


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 * 0.775+0.528 * 0.7768+0.404 * 1.119+0.892 * 0.927+0.115 * 0.817
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.6435+4.679 * -0.0989-0.327 * 0.8525
=-3.20

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $254 Mil.
Revenue was 641.527001862 + 626.023657871 + 987.202925046 + 569.498069498 = $2,824 Mil.
Gross Profit was 394.7858473 + 342.129208371 + 265.996343693 + 352.316602317 = $1,355 Mil.
Total Current Assets was $393 Mil.
Total Assets was $11,051 Mil.
Property, Plant and Equipment(Net PPE) was $8,668 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,440 Mil.
Selling, General & Admin. Expense(SGA) was $120 Mil.
Total Current Liabilities was $705 Mil.
Long-Term Debt was $1,843 Mil.
Net Income was 133.147113594 + -80.982711556 + -638.939670932 + 26.0617760618 = $-561 Mil.
Non Operating Income was 34.4506517691 + -147.406733394 + -237.659963437 + 0 = $-351 Mil.
Cash Flow from Operations was 199.255121043 + 202.001819836 + 235.831809872 + 246.138996139 = $883 Mil.
Accounts Receivable was $354 Mil.
Revenue was 749.038461538 + 683.022571148 + 1064.51612903 + 550.151975684 = $3,047 Mil.
Gross Profit was 381.730769231 + 315.996074583 + 146.169354839 + 291.79331307 = $1,136 Mil.
Total Current Assets was $563 Mil.
Total Assets was $13,893 Mil.
Property, Plant and Equipment(Net PPE) was $11,094 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,461 Mil.
Selling, General & Admin. Expense(SGA) was $201 Mil.
Total Current Liabilities was $813 Mil.
Long-Term Debt was $2,944 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)
=(254.189944134 / 2824.25165428) / (353.846153846 / 3046.7291374)
=0.09000258 / 0.11613968
=0.775

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)
=(342.129208371 / 3046.7291374) / (394.7858473 / 2824.25165428)
=0.37275697 / 0.47985384
=0.7768

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 - (392.923649907 + 8667.59776536) / 11051.2104283) / (1 - (562.5 + 11094.2307692) / 13893.2692308)
=0.18013312 / 0.16098
=1.119

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
=2824.25165428 / 3046.7291374
=0.927

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))
=(1461.11919184 / (1461.11919184 + 11094.2307692)) / (1439.76047119 / (1439.76047119 + 8667.59776536))
=0.11637423 / 0.14244676
=0.817

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)
=(119.921048648 / 2824.25165428) / (201.044814801 / 3046.7291374)
=0.04246118 / 0.0659871
=0.6435

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)
=((1842.6443203 + 704.841713222) / 11051.2104283) / ((2944.23076923 + 812.5) / 13893.2692308)
=0.23051647 / 0.27039934
=0.8525

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
=(-560.713492833 - -350.616045062 - 883.22774689) / 11051.2104283
=-0.0989

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 -3.20 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.88090.6441.9270.90161.27420.69930.8325
GMI 1.01940.90121.53610.85780.94861.12210.9748
AQI 0.95641.69521.11071.27580.8321.02071.1036
SGI 1.3631.78090.58521.21211.1770.90090.793
DEPI 0.78870.95080.94111.2911.08650.70780.8016
SGAI 1.17681.11172.13181.80010.48250.96521.0637
LVGI 1.3851.08980.92480.86031.12570.86671.0051
TATA -0.1074-0.0672-0.1113-0.0074-0.0493-0.1093-0.123
M-score -2.96-2.25-2.37-2.44-2.34-3.27-3.40

Penn West Petroleum Ltd Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.68520.55291.05760.56060.79691.31920.90460.88370.87970.775
GMI 0.88530.81530.89821.03381.081.69881.59811.21351.12990.7768
AQI 0.90940.85880.83741.02070.94091.04811.07421.10361.14721.119
SGI 1.35221.38241.06281.12381.0990.71760.8270.7470.72690.927
DEPI 0.97120.94141.01170.7320.76860.77160.7850.77980.7730.817
SGAI 0.39650.36190.51090.6180.71211.19710.87850.91951.00810.6435
LVGI 1.10121.11691.13330.86670.90120.9310.84991.00510.93470.8525
TATA -0.0579-0.0595-0.0681-0.1049-0.108-0.1234-0.1187-0.1095-0.1033-0.0989
M-score -2.76-2.92-2.77-3.16-3.01-2.66-2.89-3.18-3.20-3.20
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