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Penn West Petroleum Ltd (NYSE:PWE)
Beneish M-Score
-3.07 (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 -3.16 suggests that the company is not a manipulator.

PWE' s 10-Year Beneish M-Score Range
Min: -3.48   Max: -1.23
Current: -3.07

-3.48
-1.23

During the past 13 years, the highest Beneish M-Score of Penn West Petroleum Ltd was -1.23. The lowest was -3.48. And the median was -2.86.


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 * 0.561+0.528 * 0.9963+0.404 * 1.1188+0.892 * 1.1322+0.115 * 0.7438
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.2226+4.679 * -0.1205-0.327 * 0.9282
=-3.16

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $271 Mil.
Revenue was 626.023657871 + 985.374771481 + 569.498069498 + 1339.42307692 = $3,520 Mil.
Gross Profit was 351.228389445 + 329.067641682 + 352.316602317 + 1000 = $2,033 Mil.
Total Current Assets was $428 Mil.
Total Assets was $11,250 Mil.
Property, Plant and Equipment(Net PPE) was $8,877 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,625 Mil.
Selling, General & Admin. Expense(SGA) was $122 Mil.
Total Current Liabilities was $753 Mil.
Long-Term Debt was $2,081 Mil.
Net Income was -87.3521383076 + -665.447897623 + 26.0617760618 + -38.4615384615 = $-765 Mil.
Non Operating Income was -157.415832575 + -127.970749543 + 0 + -74.0384615385 = $-359 Mil.
Cash Flow from Operations was 211.10100091 + 300.731261426 + 246.138996139 + 191.346153846 = $949 Mil.
Accounts Receivable was $427 Mil.
Revenue was 683.022571148 + 609.879032258 + 695.035460993 + 1121.30177515 = $3,109 Mil.
Gross Profit was 566.24141315 + 212.701612903 + 291.79331307 + 717.948717949 = $1,789 Mil.
Total Current Assets was $702 Mil.
Total Assets was $14,394 Mil.
Property, Plant and Equipment(Net PPE) was $11,467 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,491 Mil.
Selling, General & Admin. Expense(SGA) was $485 Mil.
Total Current Liabilities was $1,005 Mil.
Long-Term Debt was $2,902 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)
=(271.155595996 / 3520.31957577) / (426.889106968 / 3109.23883955)
=0.07702585 / 0.13729698
=0.561

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)
=(329.067641682 / 3109.23883955) / (351.228389445 / 3520.31957577)
=0.57528069 / 0.57739435
=0.9963

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 - (427.661510464 + 8877.16105551) / 11250.2274795) / (1 - (701.668302257 + 11467.124632) / 14393.5230618)
=0.17292138 / 0.15456467
=1.1188

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
=3520.31957577 / 3109.23883955
=1.1322

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))
=(1491.46547841 / (1491.46547841 + 11467.124632)) / (1625.2303807 / (1625.2303807 + 8877.16105551))
=0.11509473 / 0.1547486
=0.7438

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)
=(122.161057243 / 3520.31957577) / (484.61516938 / 3109.23883955)
=0.0347017 / 0.15586296
=0.2226

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)
=((2080.98271156 + 753.412192903) / 11250.2274795) / ((2901.86457311 + 1004.90677134) / 14393.5230618)
=0.25194112 / 0.27142565
=0.9282

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
=(-765.199798331 - -359.425043656 - 949.317412321) / 11250.2274795
=-0.1205

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 -3.16 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 0.8530.88240.69161.79430.90161.06561.01770.6794
GMI 01.01920.93651.47820.86860.94981.0610.9675
AQI 00.95691.69561.11041.38640.84060.9291.0768
SGI 1.65831.36271.65870.62841.21211.15940.91460.7924
DEPI 0.9620.78860.95070.94121.03811.35120.73440.7574
SGAI 3.98021.18861.19241.98750.93361.33730.94870.7535
LVGI 0.99861.38511.08970.92490.8891.08940.84571.0223
TATA 0.0018-0.1074-0.0776-0.1113-0.0741-0.0493-0.0703-0.1374
M-score -3.47-2.96-2.36-2.46-2.59-2.65-2.84-3.58

Penn West Petroleum Ltd Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 1.01580.73560.68971.28681.1081.01851.01770.74380.4630.561
GMI 0.94860.83710.8641.03491.01040.95960.90730.77530.82250.9963
AQI 0.84060.90940.85880.83740.9290.94091.04811.07421.07681.1188
SGI 1.21631.25951.10820.87340.84010.85990.93031.00571.16271.1322
DEPI 1.29581.03971.03261.06840.75470.77630.76650.76820.74160.7438
SGAI 1.71320.99851.16381.55750.90311.75871.53631.38971.09780.2226
LVGI 1.08941.10121.11691.13330.84570.90120.9310.84991.02230.9282
TATA -0.0562-0.0692-0.0637-0.0655-0.0654-0.0389-0.0521-0.0437-0.086-0.1205
M-score -2.74-2.97-3.16-2.81-2.81-2.94-2.90-3.05-3.35-3.16
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