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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 -1.31. The lowest was -3.82. And the median was -2.85.
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 * 0.9954||+||0.528 * 1.1836||+||0.404 * 0.6145||+||0.892 * 0.5356||+||0.115 * 0.539|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0131||+||4.679 * -0.1842||-||0.327 * 1.3562|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $112 Mil.|
Revenue was 284.185134931 + 305.701577032 + 282.136630211 + 403.225806452 = $1,275 Mil.
Gross Profit was 140.208050656 + 140.719773554 + 115.707719131 + 166.493236212 = $563 Mil.
Total Current Assets was $575 Mil.
Total Assets was $6,341 Mil.
Property, Plant and Equipment(Net PPE) was $5,059 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,778 Mil.
Selling, General & Admin. Expense(SGA) was $74 Mil.
Total Current Liabilities was $797 Mil.
Long-Term Debt was $1,244 Mil.
Net Income was -575.908337102 + -22.6445612616 + -196.544618799 + -1536.59382588 = $-2,332 Mil.
Non Operating Income was -95.7334539424 + -22.6445612616 + -133.935647488 + -1129.03225806 = $-1,381 Mil.
Cash Flow from Operations was 44.4745967134 + -54.1852001617 + 123.632905373 + 104.058272633 = $218 Mil.
|Accounts Receivable was $211 Mil.
Revenue was 581.236944873 + 642.659279778 + 567.056705671 + 590.22556391 = $2,381 Mil.
Gross Profit was 320.588502407 + 392.42843952 + 286.228622862 + 245.30075188 = $1,245 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 $137 Mil.
Total Current Liabilities was $817 Mil.
Long-Term Debt was $1,750 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)|
|=||(112.317201869 / 1275.24914863)||/||(210.698392517 / 2381.17849423)|
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)|
|=||(140.719773554 / 2381.17849423)||/||(140.208050656 / 1275.24914863)|
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 - (575.154530378 + 5058.79692447) / 6341.02216192)||/||(1 - (355.099446009 + 8501.4985015) / 10820.0890019)|
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))|
|=||(1386.15412999 / (1386.15412999 + 8501.4985015))||/||(1778.35836985 / (1778.35836985 + 5058.79692447))|
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)|
|=||(74.2299651212 / 1275.24914863)||/||(136.805385648 / 2381.17849423)|
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)|
|=||((1243.78109453 + 796.773707221) / 6341.02216192)||/||((1750.0681137 + 817.364453728) / 10820.0890019)|
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|
|=||(-2331.69134304 - -1381.34592076||-||217.980574558)||/||6341.02216192|
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 -3.99 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