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Transocean Ltd (NYSE:RIG)
Beneish M-Score
-3.52 (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.

Transocean Ltd has a M-score of -3.52 suggests that the company is not a manipulator.

RIG' s 10-Year Beneish M-Score Range
Min: -3.58   Max: 2.47
Current: -3.52

-3.58
2.47

During the past 13 years, the highest Beneish M-Score of Transocean Ltd was 2.47. The lowest was -3.58. And the median was -2.48.


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 Transocean 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 * 0.9948+0.528 * 0.9004+0.404 * 0.2462+0.892 * 0.9919+0.115 * 0.9674
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8249+4.679 * -0.1462-0.327 * 1.0547
=-3.52

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $2,084 Mil.
Revenue was 2237 + 2270 + 2328 + 2339 = $9,174 Mil.
Gross Profit was 927 + 952 + 1115 + 1070 = $4,064 Mil.
Total Current Assets was $6,001 Mil.
Total Assets was $28,413 Mil.
Property, Plant and Equipment(Net PPE) was $21,538 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,124 Mil.
Selling, General & Admin. Expense(SGA) was $234 Mil.
Total Current Liabilities was $3,770 Mil.
Long-Term Debt was $9,059 Mil.
Net Income was -739 + -2217 + 587 + 456 = $-1,913 Mil.
Non Operating Income was 10 + 6 + 8 + -2 = $22 Mil.
Cash Flow from Operations was 566 + 882 + 636 + 136 = $2,220 Mil.
Accounts Receivable was $2,112 Mil.
Revenue was 2252 + 2449 + 2364 + 2184 = $9,249 Mil.
Gross Profit was 791 + 1063 + 1007 + 828 = $3,689 Mil.
Total Current Assets was $6,772 Mil.
Total Assets was $32,546 Mil.
Property, Plant and Equipment(Net PPE) was $21,707 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,094 Mil.
Selling, General & Admin. Expense(SGA) was $286 Mil.
Total Current Liabilities was $3,554 Mil.
Long-Term Debt was $10,379 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)
=(2084 / 9174) / (2112 / 9249)
=0.22716372 / 0.22834901
=0.9948

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)
=(952 / 9249) / (927 / 9174)
=0.39885393 / 0.44299106
=0.9004

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 - (6001 + 21538) / 28413) / (1 - (6772 + 21707) / 32546)
=0.03076057 / 0.12496159
=0.2462

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
=9174 / 9249
=0.9919

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))
=(1094 / (1094 + 21707)) / (1124 / (1124 + 21538))
=0.04798035 / 0.04959845
=0.9674

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)
=(234 / 9174) / (286 / 9249)
=0.02550687 / 0.03092226
=0.8249

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)
=((9059 + 3770) / 28413) / ((10379 + 3554) / 32546)
=0.45151867 / 0.42810176
=1.0547

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
=(-1913 - 22 - 2220) / 28413
=-0.1462

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.

Transocean Ltd has a M-score of -3.52 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.

Transocean Ltd Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.22691.15351.44750.65230.91331.21911.01450.82641.08240.9948
GMI 0.83860.91020.78890.97651.04011.18322.03820.68520.84310.8996
AQI 0.94550.93521.22360.9590.96241.01370.76970.72080.90540.2462
SGI 1.10641.34231.64271.98750.91180.68791.00981.14561.00580.9919
DEPI 1.20091.07582.69470.55780.70631.20030.83640.8531.18970.9674
SGAI 1.01180.8940.96050.70511.15191.71111.15940.85471.00840.8249
LVGI 0.75441.82241.49480.80220.83390.95881.35951.00320.88581.0547
TATA -0.0336-0.0276-0.0149-0.027-0.0664-0.0801-0.2135-0.084-0.0148-0.1462
M-score -2.34-2.48-1.55-2.01-2.95-2.92-3.17-3.17-2.53-3.53

Transocean Ltd Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.83850.87760.86630.90371.04761.08241.03231.04470.93190.9948
GMI 1.49550.70840.75610.43770.54990.84250.78710.95540.950.9004
AQI 0.50460.72081.01540.94280.98390.90540.88830.91870.50270.2462
SGI 1.26081.07881.09191.09661.04461.00581.01451.00680.98560.9919
DEPI 0.53220.90020.79860.82681.13751.12741.14111.08720.99430.9674
SGAI 0.90950.90760.88430.83660.86631.00840.97170.93610.9080.8249
LVGI 1.39631.00320.92760.91850.85530.88580.93350.95521.03111.0547
TATA -0.2599-0.084-0.0658-0.0462-0.0123-0.0148-0.0118-0.0106-0.1125-0.1462
M-score -3.72-3.18-2.93-2.98-2.61-2.54-2.61-2.50-3.30-3.52
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