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Transocean Ltd (NYSE:RIG)
Beneish M-Score
-3.08 (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 -3.08 suggests that the company is not a manipulator.

RIG' s Beneish M-Score Range Over the Past 10 Years
Min: -4.85   Max: 2.47
Current: -3.08

-4.85
2.47

During the past 13 years, the highest Beneish M-Score of Transocean Ltd was 2.47. The lowest was -4.85. And the median was -2.53.


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 * 0.9233+0.528 * 1.0422+0.404 * 0.9856+0.892 * 0.6482+0.115 * 1.2232
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.4252+4.679 * -0.0475-0.327 * 0.8964
=-3.08

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $887 Mil.
Revenue was 903 + 943 + 1341 + 1851 = $5,038 Mil.
Gross Profit was 499 + 443 + 676 + 1057 = $2,675 Mil.
Total Current Assets was $4,491 Mil.
Total Assets was $26,167 Mil.
Property, Plant and Equipment(Net PPE) was $21,100 Mil.
Depreciation, Depletion and Amortization(DDA) was $865 Mil.
Selling, General & Admin. Expense(SGA) was $182 Mil.
Total Current Liabilities was $2,306 Mil.
Long-Term Debt was $7,191 Mil.
Net Income was 229 + 77 + 249 + 611 = $1,166 Mil.
Non Operating Income was 117 + 41 + -1 + 15 = $172 Mil.
Cash Flow from Operations was 440 + 207 + 631 + 960 = $2,238 Mil.
Accounts Receivable was $1,482 Mil.
Revenue was 1608 + 1884 + 2043 + 2237 = $7,772 Mil.
Gross Profit was 728 + 1687 + 959 + 927 = $4,301 Mil.
Total Current Assets was $4,906 Mil.
Total Assets was $25,835 Mil.
Property, Plant and Equipment(Net PPE) was $20,352 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,030 Mil.
Selling, General & Admin. Expense(SGA) was $197 Mil.
Total Current Liabilities was $1,830 Mil.
Long-Term Debt was $8,630 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)
=(887 / 5038) / (1482 / 7772)
=0.17606193 / 0.19068451
=0.9233

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)
=(4301 / 7772) / (2675 / 5038)
=0.55339681 / 0.53096467
=1.0422

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 - (4491 + 21100) / 26167) / (1 - (4906 + 20352) / 25835)
=0.02201246 / 0.02233404
=0.9856

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
=5038 / 7772
=0.6482

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))
=(1030 / (1030 + 20352)) / (865 / (865 + 21100))
=0.04817136 / 0.03938083
=1.2232

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)
=(182 / 5038) / (197 / 7772)
=0.03612545 / 0.0253474
=1.4252

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)
=((7191 + 2306) / 26167) / ((8630 + 1830) / 25835)
=0.36293805 / 0.4048771
=0.8964

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
=(1166 - 172 - 2238) / 26167
=-0.0475

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 -3.08 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 local exchange's currency.

Transocean Ltd Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.15351.44750.65230.91331.12341.1010.84961.05290.99480.8219
GMI 0.91020.78890.97651.04011.18322.03820.66730.86570.89960.7384
AQI 0.93521.22360.9590.96241.02910.75820.72080.90540.33410.6604
SGI 1.34231.64271.98750.91180.68791.00981.11441.0340.99190.8051
DEPI 1.07582.69470.55780.70631.19280.64691.10981.18970.96741.1388
SGAI 0.8940.96050.70511.15191.71111.15940.87870.98080.82491.0245
LVGI 1.82241.49480.80220.83390.95881.35951.00320.88581.04550.8542
TATA 0.0077-0.0067-0.027-0.0664-0.0801-0.2135-0.084-0.0148-0.1454-0.1031
M-score -2.31-1.51-2.01-2.95-3.00-3.11-3.17-2.52-3.48-3.52

Transocean Ltd Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 1.01650.90680.99480.93840.90610.8060.82190.73990.76110.9233
GMI 0.98090.97520.90040.93880.80360.77240.73840.71751.0611.0422
AQI 0.91870.50270.33410.20940.18080.35060.66040.97341.08590.9856
SGI 1.03471.01290.99190.94410.90030.84580.80510.75290.68090.6482
DEPI 1.08720.99430.96740.88630.87951.01771.14691.32451.38351.2232
SGAI 0.91090.88350.82490.85580.86490.9431.02451.13171.35341.4252
LVGI 0.95521.03111.04551.09561.03230.89620.85420.83520.82120.8964
TATA -0.0106-0.1125-0.1454-0.2041-0.2388-0.1419-0.1031-0.0777-0.0482-0.0475
M-score -2.49-3.29-3.48-3.91-4.21-3.80-3.52-3.39-3.10-3.08
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