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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 -1.22. The lowest was -3.62. 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 * 0.9856||+||0.528 * 1.1115||+||0.404 * 0.5602||+||0.892 * 0.6413||+||0.115 * 0.9839|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1212||+||4.679 * -0.1055||-||0.327 * 1.2193|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $159 Mil.|
Revenue was 305.701577032 + 282.136630211 + 446.583420049 + 552.17509763 = $1,587 Mil.
Gross Profit was 140.719773554 + 115.707719131 + 195.976413458 + 296.067568795 = $748 Mil.
Total Current Assets was $338 Mil.
Total Assets was $7,582 Mil.
Property, Plant and Equipment(Net PPE) was $6,479 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,199 Mil.
Selling, General & Admin. Expense(SGA) was $92 Mil.
Total Current Liabilities was $607 Mil.
Long-Term Debt was $1,524 Mil.
Net Income was -22.6445612616 + -196.544618799 + -1536.59382588 + -13.6227408955 = $-1,769 Mil.
Non Operating Income was -22.6445612616 + -133.935647488 + -1201.00589664 + -50.8582326764 = $-1,408 Mil.
Cash Flow from Operations was -54.1852001617 + 123.632905373 + 104.058272633 + 265.189356098 = $439 Mil.
|Accounts Receivable was $252 Mil.
Revenue was 636.195752539 + 567.056705671 + 563.909774436 + 706.963249516 = $2,474 Mil.
Gross Profit was 391.505078486 + 295.229522952 + 257.518796992 + 352.998065764 = $1,297 Mil.
Total Current Assets was $390 Mil.
Total Assets was $10,959 Mil.
Property, Plant and Equipment(Net PPE) was $8,596 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,560 Mil.
Selling, General & Admin. Expense(SGA) was $128 Mil.
Total Current Liabilities was $699 Mil.
Long-Term Debt was $1,827 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)|
|=||(159.320663162 / 1586.59672492)||/||(252.077562327 / 2474.12548216)|
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)|
|=||(115.707719131 / 2474.12548216)||/||(140.719773554 / 1586.59672492)|
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 - (338.050950263 + 6478.77072382) / 7581.88435099)||/||(1 - (389.658356417 + 8595.56786704) / 10959.3721145)|
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))|
|=||(1560.03858117 / (1560.03858117 + 8595.56786704))||/||(1198.61397735 / (1198.61397735 + 6478.77072382))|
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)|
|=||(91.6940327888 / 1586.59672492)||/||(127.532039802 / 2474.12548216)|
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)|
|=||((1524.46421351 + 606.550748079) / 7581.88435099)||/||((1827.33148661 + 698.984302862) / 10959.3721145)|
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|
|=||(-1769.40574683 - -1408.44433806||-||438.695333943)||/||7581.88435099|
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 -3.52 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