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Transocean Ltd (NYSE:RIG)
Beneish M-Score
-3.29 (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 -3.29 suggests that the company is not a manipulator.

RIG' s 10-Year Beneish M-Score Range
Min: -4.39   Max: 2.47
Current: -3.29

-4.39
2.47

During the past 13 years, the highest Beneish M-Score of Transocean Ltd was 2.47. The lowest was -4.39. 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 * 0.9086+0.528 * 0.9726+0.404 * 0.5027+0.892 * 1.0108+0.115 * 0.9943
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8853+4.679 * -0.1126-0.327 * 1.0311
=-3.29

* 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 $2,174 Mil.
Revenue was 2270 + 2328 + 2339 + 2487 = $9,424 Mil.
Gross Profit was 952 + 1115 + 1070 + 798 = $3,935 Mil.
Total Current Assets was $6,367 Mil.
Total Assets was $29,964 Mil.
Property, Plant and Equipment(Net PPE) was $21,688 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,118 Mil.
Selling, General & Admin. Expense(SGA) was $247 Mil.
Total Current Liabilities was $3,546 Mil.
Long-Term Debt was $9,991 Mil.
Net Income was -2217 + 587 + 456 + 233 = $-941 Mil.
Non Operating Income was 6 + 8 + -2 + -7 = $5 Mil.
Cash Flow from Operations was 882 + 636 + 136 + 773 = $2,427 Mil.
Accounts Receivable was $2,367 Mil.
Revenue was 2449 + 2364 + 2184 + 2326 = $9,323 Mil.
Gross Profit was 1063 + 1007 + 828 + 888 = $3,786 Mil.
Total Current Assets was $7,373 Mil.
Total Assets was $32,601 Mil.
Property, Plant and Equipment(Net PPE) was $21,096 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,081 Mil.
Selling, General & Admin. Expense(SGA) was $276 Mil.
Total Current Liabilities was $3,776 Mil.
Long-Term Debt was $10,508 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)
=(2174 / 9424) / (2367 / 9323)
=0.23068761 / 0.25388823
=0.9086

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)
=(1115 / 9323) / (952 / 9424)
=0.40609246 / 0.41755093
=0.9726

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 - (6367 + 21688) / 29964) / (1 - (7373 + 21096) / 32601)
=0.06370979 / 0.12674458
=0.5027

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
=9424 / 9323
=1.0108

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))
=(1081 / (1081 + 21096)) / (1118 / (1118 + 21688))
=0.04874419 / 0.04902219
=0.9943

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)
=(247 / 9424) / (276 / 9323)
=0.02620968 / 0.0296042
=0.8853

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)
=((9991 + 3546) / 29964) / ((10508 + 3776) / 32601)
=0.45177546 / 0.43814607
=1.0311

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
=(-941 - 5 - 2427) / 29964
=-0.1126

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 -3.29 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.8571.22691.15351.44750.65230.91331.21911.01450.82641.0556
GMI 0.99670.83860.91020.78890.97651.04011.18322.03820.68520.8629
AQI 1.15850.94550.93521.22360.9590.96241.01370.76970.72080.9054
SGI 1.07381.10641.34231.64271.98750.91180.68791.00981.14561.0313
DEPI 0.84981.20091.07582.69470.55780.70631.20030.83640.8531.1897
SGAI 0.95551.01180.8940.96050.70511.15191.71111.15940.85470.9834
LVGI 0.76040.75441.82241.49480.80220.83390.95881.35951.00320.8858
TATA -0.0519-0.0336-0.0276-0.0149-0.027-0.0664-0.0801-0.2135-0.084-0.0148
M-score -2.66-2.34-2.48-1.55-2.01-2.95-2.92-3.17-3.17-2.52

Transocean Ltd Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.87260.83850.87760.86630.90371.04761.05561.00711.01910.9086
GMI 2.10421.49550.70840.75610.43770.54990.86220.80530.97770.9726
AQI 0.56730.50460.72081.01540.94280.98390.90540.88830.91870.5027
SGI 1.15141.26081.07881.09191.09661.04461.03131.03981.0321.0108
DEPI 0.97340.53220.90020.79860.82681.13751.12741.14111.08720.9943
SGAI 1.020.90950.90760.88430.83660.86630.98340.9480.91320.8853
LVGI 1.31721.39631.00320.92760.91850.85530.88580.93350.95521.0311
TATA -0.2457-0.2599-0.084-0.0658-0.0462-0.0123-0.0148-0.0118-0.0106-0.1126
M-score -3.31-3.72-3.18-2.93-2.98-2.61-2.53-2.59-2.49-3.29
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