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Penn West Petroleum Ltd (NYSE:PWE)
Beneish M-Score
-4.50 (As of Today)

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 -4.41 suggests that the company is not a manipulator.

PWE' s Beneish M-Score Range Over the Past 10 Years
Min: -4.5   Max: -1.33
Current: -4.5

-4.5
-1.33

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.


Definition

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
=-4.41

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

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

Measured as the ratio of days’ sales in receivables in year t to year t-1.

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)
=0.10539368 / 0.07719999
=1.3652

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(1046.72459805 / 1960.7653621) / (445.856462337 / 961.306139559)
=0.5338347 / 0.46380278
=1.151

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

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)
=0.02547203 / 0.10610867
=0.2401

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=961.306139559 / 1960.7653621
=0.4903

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))
=0.15486504 / 0.33140917
=0.4673

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)
=0.07399014 / 0.05416924
=1.3659

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)
=0.39454934 / 0.3070705
=1.2849

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(-1845.31301011 - -661.631262916 - 56.1000187018) / 4244.6695902
=-0.2921

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.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Penn West Petroleum Ltd Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.88110.69141.79480.90161.06560.89250.8050.77091.4834
GMI 1.01920.93651.47820.86860.94981.14020.92840.93081.1867
AQI 0.95641.69521.11071.27580.8381.01341.10360.60120.3726
SGI 1.34671.63360.6271.20671.16310.8680.84140.8220.4797
DEPI 0.78870.95070.94121.14321.16140.75810.75451.09940.4682
SGAI 1.18861.19241.98750.93361.12690.93460.93611.00321.2014
LVGI 1.3851.08980.92480.86031.14760.85011.0291.09071.3878
TATA -0.1074-0.0777-0.1229-0.0801-0.0478-0.1028-0.1374-0.1156-0.319
M-score -2.97-2.38-2.51-2.65-2.64-3.07-3.47-3.61-4.37

Penn West Petroleum Ltd Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.83110.7850.81280.75340.75350.75030.97750.95851.4541.3652
GMI 1.13471.02210.8710.88990.85870.90831.04091.12611.18111.151
AQI 1.10361.14721.1191.13520.60120.59840.56020.61450.37260.2401
SGI 0.81510.80980.86890.82380.8410.74720.64660.55610.48940.4903
DEPI 0.7820.75360.79240.80681.0450.99960.94120.54060.46830.4673
SGAI 1.01331.15310.89370.93490.86580.80750.89980.92111.19661.3659
LVGI 1.0290.93470.85250.91411.09071.21041.21931.35621.38781.2849
TATA -0.1298-0.129-0.119-0.1144-0.1114-0.1392-0.1291-0.205-0.3327-0.2921
M-score -3.33-3.41-3.30-3.39-3.61-3.83-3.64-4.12-4.45-4.41
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