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Penn West Petroleum Ltd (NYSE:PWE)
Beneish M-Score
-3.34 (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 -3.43 suggests that the company is not a manipulator.

PWE' s 10-Year Beneish M-Score Range
Min: -3.34   Max: -1.77
Current: -3.34

-3.34
-1.77

During the past 13 years, the highest Beneish M-Score of Penn West Petroleum Ltd was -1.77. The lowest was -3.34. And the median was -2.76.


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 * 0.7327+0.528 * 0.8769+0.404 * 1.0988+0.892 * 0.8941+0.115 * 0.76
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.8829+4.679 * -0.086-0.327 * 1.0185
=-3.43

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $240 Mil.
Revenue was 985.374771481 + 569.498069498 + 1339.42307692 + 683.022571148 = $3,577 Mil.
Gross Profit was 329.067641682 + 352.316602317 + 1000 + 566.24141315 = $2,248 Mil.
Total Current Assets was $421 Mil.
Total Assets was $11,558 Mil.
Property, Plant and Equipment(Net PPE) was $9,175 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,713 Mil.
Selling, General & Admin. Expense(SGA) was $360 Mil.
Total Current Liabilities was $740 Mil.
Long-Term Debt was $2,188 Mil.
Net Income was -665.447897623 + 26.0617760618 + -38.4615384615 + -95.1913640824 = $-773 Mil.
Non Operating Income was -127.970749543 + 0 + -74.0384615385 + -566.24141315 = $-768 Mil.
Cash Flow from Operations was 300.731261426 + 246.138996139 + 191.346153846 + 251.226692836 = $989 Mil.
Accounts Receivable was $367 Mil.
Revenue was 1064.51612903 + 550.151975684 + 1735.70019724 + 650.55387714 = $4,001 Mil.
Gross Profit was 212.701612903 + 291.79331307 + 1332.34714004 + 367.573011078 = $2,204 Mil.
Total Current Assets was $712 Mil.
Total Assets was $14,553 Mil.
Property, Plant and Equipment(Net PPE) was $11,594 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,575 Mil.
Selling, General & Admin. Expense(SGA) was $214 Mil.
Total Current Liabilities was $914 Mil.
Long-Term Debt was $2,707 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)
=(240.402193784 / 3577.31848905) / (366.935483871 / 4000.92217909)
=0.06720179 / 0.09171273
=0.7327

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)
=(352.316602317 / 4000.92217909) / (329.067641682 / 3577.31848905)
=0.55097674 / 0.62829901
=0.8769

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 - (421.389396709 + 9174.58866545) / 11557.5868373) / (1 - (711.693548387 + 11593.75) / 14553.4274194)
=0.16972477 / 0.15446422
=1.0988

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
=3577.31848905 / 4000.92217909
=0.8941

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))
=(1575.05126894 / (1575.05126894 + 11593.75)) / (1713.40492782 / (1713.40492782 + 9174.58866545))
=0.11960476 / 0.15736645
=0.76

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)
=(360.257783591 / 3577.31848905) / (213.987672427 / 4000.92217909)
=0.1007061 / 0.05348459
=1.8829

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)
=((2188.29981718 + 740.402193784) / 11557.5868373) / ((2706.65322581 + 914.314516129) / 14553.4274194)
=0.25340082 / 0.24880515
=1.0185

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
=(-773.039024106 - -768.250624232 - 989.443104247) / 11557.5868373
=-0.086

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 -3.43 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.88090.6441.9270.90161.27420.69930.8268
GMI 1.01940.90121.53610.85780.94861.07560.9675
AQI 0.95641.69521.11071.27580.8320.99971.0988
SGI 1.3631.78090.58521.21211.1770.90090.7924
DEPI 0.78870.95080.94111.2911.08650.71220.781
SGAI 1.17681.11172.13181.80010.48250.96521.0645
LVGI 1.3851.08980.92480.86031.12570.84881.0185
TATA -0.1074-0.0672-0.1113-0.0074-0.0493-0.0991-0.1374
M-score -2.96-2.25-2.37-2.44-2.34-3.25-3.49

Penn West Petroleum Ltd Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.141.26860.68520.55291.05760.56060.79691.1050.75850.7327
GMI 0.90270.90790.88530.81530.89821.00260.93771.11221.06970.8769
AQI 0.84570.8320.90940.85880.83740.99970.94091.04811.07421.0988
SGI 1.16071.18231.35221.38241.06281.12381.0990.85670.98630.8941
DEPI 1.23271.03970.97120.94141.01170.73640.7570.7570.76940.76
SGAI 2.05970.6480.39650.36190.51090.6181.57962.06661.58281.8829
LVGI 1.07641.12571.10121.11691.13330.84880.90120.9310.84991.0185
TATA -0.0266-0.0446-0.0579-0.0595-0.0681-0.0947-0.0683-0.0833-0.078-0.086
M-score -2.63-2.37-2.76-2.92-2.77-3.13-3.05-3.01-3.09-3.43
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