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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 Penn West Petroleum Ltd was -1.33. The lowest was -4.50. And the median was -2.90.
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 * 1.3652||+||0.528 * 1.151||+||0.404 * 0.2401||+||0.892 * 0.4903||+||0.115 * 0.4673|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.3659||+||4.679 * -0.2921||-||0.327 * 1.2849|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $101.3 Mil.|
Revenue was 150.461212763 + 220.958214833 + 284.185134931 + 305.701577032 = $961.3 Mil.
Gross Profit was 65.0234386814 + 99.9051994458 + 140.208050656 + 140.719773554 = $445.9 Mil.
Total Current Assets was $397.7 Mil.
Total Assets was $4,244.7 Mil.
Property, Plant and Equipment(Net PPE) was $3,738.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,853.3 Mil.
Selling, General & Admin. Expense(SGA) was $71.1 Mil.
Total Current Liabilities was $477.8 Mil.
Long-Term Debt was $1,196.9 Mil.
Net Income was -75.6086496295 + -1171.15146212 + -575.908337102 + -22.6445612616 = $-1,845.3 Mil.
Non Operating Income was 0.756086496295 + -544.009334208 + -95.7334539424 + -22.6445612616 = $-661.6 Mil.
Cash Flow from Operations was 46.121276274 + 19.6893458762 + 44.4745967134 + -54.1852001617 = $56.1 Mil.
|Accounts Receivable was $151.4 Mil.
Revenue was 287.68426058 + 449.184876864 + 581.236944873 + 642.659279778 = $1,960.8 Mil.
Gross Profit was 121.255349501 + 212.452306625 + 320.588502407 + 392.42843952 = $1,046.7 Mil.
Total Current Assets was $245.7 Mil.
Total Assets was $7,745.3 Mil.
Property, Plant and Equipment(Net PPE) was $6,677.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,223.7 Mil.
Selling, General & Admin. Expense(SGA) was $106.2 Mil.
Total Current Liabilities was $629.3 Mil.
Long-Term Debt was $1,749.1 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)|
|=||(101.315590504 / 961.306139559)||/||(151.37105722 / 1960.7653621)|
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)|
|=||(99.9051994458 / 1960.7653621)||/||(65.0234386814 / 961.306139559)|
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 - (397.701497051 + 3738.84772418) / 4244.6695902)||/||(1 - (245.680773498 + 6677.76192741) / 7745.28451419)|
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))|
|=||(1223.65295557 / (1223.65295557 + 6677.76192741))||/||(1853.28361588 / (1853.28361588 + 3738.84772418))|
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)|
|=||(71.1271739915 / 961.306139559)||/||(106.213166301 / 1960.7653621)|
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)|
|=||((1196.88492364 + 477.846665659) / 4244.6695902)||/||((1749.08860358 + 629.259787605) / 7745.28451419)|
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|
|=||(-1845.31301011 - -661.631262916||-||56.1000187018)||/||4244.6695902|
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 -4.41 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
Penn West Petroleum Ltd Annual Data
Penn West Petroleum Ltd Quarterly Data