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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 -5.13. And the median was -2.91.
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 * 1.366||+||0.528 * 1.0015||+||0.404 * 0.0659||+||0.892 * 0.4624||+||0.115 * 0.7765|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.6439||+||4.679 * -0.3172||-||0.327 * 0.8569|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $70.9 Mil.|
Revenue was 109.093683247 + 122.537614394 + 150.461212763 + 220.958214833 = $603.1 Mil.
Gross Profit was 57.2169667379 + 51.1865984179 + 65.0234386814 + 99.9051994458 = $273.3 Mil.
Total Current Assets was $500.5 Mil.
Total Assets was $3,012.7 Mil.
Property, Plant and Equipment(Net PPE) was $2,490.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,237.0 Mil.
Selling, General & Admin. Expense(SGA) was $61.0 Mil.
Total Current Liabilities was $492.8 Mil.
Long-Term Debt was $338.0 Mil.
Net Income was -176.991150442 + -102.373196836 + -75.6086496295 + -1171.15146212 = $-1,526.1 Mil.
Non Operating Income was -78.5779676533 + 36.4510625097 + 68.0477846666 + -544.009334208 = $-518.1 Mil.
Cash Flow from Operations was -74.7635032042 + -43.431053203 + 46.121276274 + 19.6893458762 = $-52.4 Mil.
|Accounts Receivable was $112.3 Mil.
Revenue was 284.185134931 + 283.05701577 + 287.68426058 + 449.184876864 = $1,304.1 Mil.
Gross Profit was 140.208050656 + 118.075212293 + 121.255349501 + 212.452306625 = $592.0 Mil.
Total Current Assets was $575.2 Mil.
Total Assets was $6,341.0 Mil.
Property, Plant and Equipment(Net PPE) was $5,058.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,756.4 Mil.
Selling, General & Admin. Expense(SGA) was $80.3 Mil.
Total Current Liabilities was $796.8 Mil.
Long-Term Debt was $1,243.8 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)|
|=||(70.949038755 / 603.050725237)||/||(112.317201869 / 1304.11128815)|
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)|
|=||(591.990919074 / 1304.11128815)||/||(273.332203283 / 603.050725237)|
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 - (500.457735734 + 2490.08239243) / 3012.66402197)||/||(1 - (575.154530378 + 5058.79692447) / 6341.02216192)|
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))|
|=||(1756.35409841 / (1756.35409841 + 5058.79692447))||/||(1236.95249654 / (1236.95249654 + 2490.08239243))|
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)|
|=||(61.0104242385 / 603.050725237)||/||(80.2604189128 / 1304.11128815)|
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)|
|=||((337.961550198 + 492.828806836) / 3012.66402197)||/||((1243.78109453 + 796.773707221) / 6341.02216192)|
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|
|=||(-1526.12445902 - -518.088454685||-||-52.383934257)||/||3012.66402197|
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 -4.57 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