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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.
Penn West Petroleum Ltd has a M-score of -3.20 suggests that the company is not a manipulator.
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.
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|
|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
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)|
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)|
|=||(342.129208371 / 3046.7291374)||/||(394.7858473 / 2824.25165428)|
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 - (392.923649907 + 8667.59776536) / 11051.2104283)||/||(1 - (562.5 + 11094.2307692) / 13893.2692308)|
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))|
|=||(1461.11919184 / (1461.11919184 + 11094.2307692))||/||(1439.76047119 / (1439.76047119 + 8667.59776536))|
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)|
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)|
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|
|=||(-560.713492833 - -350.616045062||-||883.22774689)||/||11051.2104283|
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.
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