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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 -1.31. The lowest was -3.61. And the median was -2.84.
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 * 0.7661||+||0.528 * 0.9319||+||0.404 * 0.5984||+||0.892 * 0.7318||+||0.115 * 0.9947|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8642||+||4.679 * -0.1231||-||0.327 * 1.2104|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $151 Mil.|
Revenue was 282.136630211 + 446.583420049 + 552.17509763 + 636.195752539 = $1,917 Mil.
Gross Profit was 115.707719131 + 195.976413458 + 296.067568795 + 391.505078486 = $999 Mil.
Total Current Assets was $246 Mil.
Total Assets was $7,745 Mil.
Property, Plant and Equipment(Net PPE) was $6,678 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,231 Mil.
Selling, General & Admin. Expense(SGA) was $106 Mil.
Total Current Liabilities was $629 Mil.
Long-Term Debt was $1,749 Mil.
Net Income was -196.544618799 + -1536.59382588 + -13.6227408955 + 132.040627886 = $-1,615 Mil.
Non Operating Income was -133.935647488 + -1201.00589664 + -50.8582326764 + 34.1643582641 = $-1,352 Mil.
Cash Flow from Operations was 123.632905373 + 104.058272633 + 265.189356098 + 197.599261311 = $690 Mil.
|Accounts Receivable was $270 Mil.
Revenue was 567.056705671 + 590.22556391 + 706.963249516 + 755.577109602 = $2,620 Mil.
Gross Profit was 286.228622862 + 245.30075188 + 355.899419729 + 385.063045587 = $1,272 Mil.
Total Current Assets was $425 Mil.
Total Assets was $10,853 Mil.
Property, Plant and Equipment(Net PPE) was $8,504 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,558 Mil.
Selling, General & Admin. Expense(SGA) was $168 Mil.
Total Current Liabilities was $695 Mil.
Long-Term Debt was $2,059 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)|
|=||(151.37105722 / 1917.09090043)||/||(270.0270027 / 2619.8226287)|
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)|
|=||(195.976413458 / 2619.8226287)||/||(115.707719131 / 1917.09090043)|
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 - (245.680773498 + 6677.76192741) / 7745.28451419)||/||(1 - (424.842484248 + 8504.05040504) / 10853.2853285)|
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))|
|=||(1557.57248099 / (1557.57248099 + 8504.05040504))||/||(1230.78562319 / (1230.78562319 + 6677.76192741))|
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)|
|=||(106.213166301 / 1917.09090043)||/||(167.951248437 / 2619.8226287)|
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)|
|=||((1749.08860358 + 629.259787605) / 7745.28451419)||/||((2058.50585059 + 694.869486949) / 10853.2853285)|
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|
|=||(-1614.72055768 - -1351.63541854||-||690.479795416)||/||7745.28451419|
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 -3.75 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