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Penn West Petroleum Ltd (NYSE:PWE)
Beneish M-Score
-3.26 (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 -3.33 suggests that the company is not a manipulator.

PWE' s 10-Year Beneish M-Score Range
Min: -3.48   Max: -1.23
Current: -3.26

-3.48
-1.23

During the past 13 years, the highest Beneish M-Score of Penn West Petroleum Ltd was -1.23. The lowest was -3.48. And the median was -2.87.


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 * 0.6951+0.528 * 0.8278+0.404 * 1.1352+0.892 * 0.893+0.115 * 0.8109
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.4599+4.679 * -0.114-0.327 * 0.9141
=-3.33

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $211 Mil.
Revenue was 552.17509763 + 636.195752539 + 567.056705671 + 646.616541353 = $2,402 Mil.
Gross Profit was 296.067568795 + 391.505078486 + 286.228622862 + 326.127819549 = $1,300 Mil.
Total Current Assets was $355 Mil.
Total Assets was $10,820 Mil.
Property, Plant and Equipment(Net PPE) was $8,501 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,386 Mil.
Selling, General & Admin. Expense(SGA) was $107 Mil.
Total Current Liabilities was $817 Mil.
Long-Term Debt was $1,750 Mil.
Net Income was -13.6227408955 + 132.040627886 + -80.1080108011 + -634.398496241 = $-596 Mil.
Non Operating Income was -50.8582326764 + 34.1643582641 + -93.6093609361 + -210.526315789 = $-321 Mil.
Cash Flow from Operations was 265.189356098 + 197.599261311 + 199.819981998 + 295.112781955 = $958 Mil.
Accounts Receivable was $339 Mil.
Revenue was 706.963249516 + 755.577109602 + 616.2109375 + 611.111111111 = $2,690 Mil.
Gross Profit was 355.899419729 + 385.063045587 + 250.9765625 + 213.131313131 = $1,205 Mil.
Total Current Assets was $566 Mil.
Total Assets was $13,715 Mil.
Property, Plant and Equipment(Net PPE) was $10,956 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,405 Mil.
Selling, General & Admin. Expense(SGA) was $260 Mil.
Total Current Liabilities was $715 Mil.
Long-Term Debt was $2,845 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)
=(210.698392517 / 2402.04409719) / (339.458413926 / 2689.86240773)
=0.08771629 / 0.12619917
=0.6951

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)
=(391.505078486 / 2689.86240773) / (296.067568795 / 2402.04409719)
=0.44800445 / 0.5411762
=0.8278

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 - (355.099446009 + 8501.4985015) / 10820.0890019) / (1 - (565.764023211 + 10956.4796905) / 13714.7001934)
=0.18146718 / 0.15986179
=1.1352

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
=2402.04409719 / 2689.86240773
=0.893

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))
=(1405.35942325 / (1405.35942325 + 10956.4796905)) / (1386.15412999 / (1386.15412999 + 8501.4985015))
=0.1136853 / 0.14019042
=0.8109

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)
=(106.730197678 / 2402.04409719) / (259.867225308 / 2689.86240773)
=0.04443307 / 0.09660986
=0.4599

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)
=((1750.0681137 + 817.364453728) / 10820.0890019) / ((2845.26112186 + 714.700193424) / 13714.7001934)
=0.23728387 / 0.25957267
=0.9141

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
=(-596.088620052 - -320.829551138 - 957.721381363) / 10820.0890019
=-0.114

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 -3.33 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 0.88240.69161.79430.90161.06560.83630.8325
GMI 1.01920.93651.47820.86860.94981.0611.0169
AQI 0.95691.69561.11041.38640.84060.9291.1043
SGI 1.34671.63360.6271.20671.16310.92640.8137
DEPI 0.78860.95070.94121.03811.35120.73440.7726
SGAI 1.18861.19241.98750.93361.33730.94870.7529
LVGI 1.38511.08970.92490.8891.08940.84571.0301
TATA -0.1074-0.0776-0.1113-0.0741-0.0493-0.0703-0.123
M-score -2.97-2.38-2.46-2.59-2.64-2.99-3.32

Penn West Petroleum Ltd Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.68421.27310.91731.03481.28820.87430.76270.72080.74140.6951
GMI 0.8631.03721.01341.1431.32621.15091.06670.95580.80110.8278
AQI 0.85880.83740.9290.94091.04811.07421.10431.14721.1191.1352
SGI 1.12720.87610.84450.84310.75160.84950.88820.88180.95250.893
DEPI 1.02681.0550.75730.7690.77890.76320.75840.74780.79090.8109
SGAI 1.15811.56350.9090.95311.05380.91080.58860.61150.48160.4599
LVGI 1.11691.13330.84570.90120.9310.84991.03010.93470.85250.9141
TATA -0.0645-0.0648-0.0655-0.0756-0.0879-0.0841-0.1233-0.1212-0.1162-0.114
M-score -3.15-2.82-2.98-2.88-2.67-2.98-3.26-3.31-3.25-3.33
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