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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 -5.11. And the median was -2.90.
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 * 1.2921||+||0.528 * 1.0534||+||0.404 * 0.2349||+||0.892 * 0.486||+||0.115 * 0.3715|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.3824||+||4.679 * -0.3838||-||0.327 * 1.3166|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $100.0 Mil.|
Revenue was 122.537614394 + 150.461212763 + 220.958214833 + 284.185134931 = $778.1 Mil.
Gross Profit was 51.1865984179 + 65.0234386814 + 99.9051994458 + 140.208050656 = $356.3 Mil.
Total Current Assets was $1,079.6 Mil.
Total Assets was $3,795.6 Mil.
Property, Plant and Equipment(Net PPE) was $2,626.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,868.9 Mil.
Selling, General & Admin. Expense(SGA) was $61.6 Mil.
Total Current Liabilities was $783.3 Mil.
Long-Term Debt was $621.2 Mil.
Net Income was -102.373196836 + -75.6086496295 + -1171.15146212 + -575.908337102 = $-1,925.0 Mil.
Non Operating Income was 36.4510625097 + 68.0477846666 + -544.009334208 + -95.7334539424 = $-535.2 Mil.
Cash Flow from Operations was -43.431053203 + 46.121276274 + 19.6893458762 + 44.4745967134 = $66.9 Mil.
|Accounts Receivable was $159.3 Mil.
Revenue was 283.05701577 + 287.68426058 + 449.184876864 + 581.236944873 = $1,601.2 Mil.
Gross Profit was 118.075212293 + 121.255349501 + 212.452306625 + 320.588502407 = $772.4 Mil.
Total Current Assets was $338.1 Mil.
Total Assets was $7,581.9 Mil.
Property, Plant and Equipment(Net PPE) was $6,478.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,183.4 Mil.
Selling, General & Admin. Expense(SGA) was $91.7 Mil.
Total Current Liabilities was $606.6 Mil.
Long-Term Debt was $1,524.5 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)|
|=||(100.046533271 / 778.142176921)||/||(159.320663162 / 1601.16309809)|
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)|
|=||(772.371370825 / 1601.16309809)||/||(356.323287201 / 778.142176921)|
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 - (1079.5718939 + 2626.02760974) / 3795.56382814)||/||(1 - (338.050950263 + 6478.77072382) / 7581.88435099)|
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))|
|=||(1183.39396643 / (1183.39396643 + 6478.77072382))||/||(1868.89405757 / (1868.89405757 + 2626.02760974))|
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)|
|=||(61.6006799765 / 778.142176921)||/||(91.6940327888 / 1601.16309809)|
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)|
|=||((621.219171708 + 783.310066698) / 3795.56382814)||/||((1524.46421351 + 606.550748079) / 7581.88435099)|
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|
|=||(-1925.04164568 - -535.243940975||-||66.8541656605)||/||3795.56382814|
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 -4.99 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