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Transocean Ltd (NYSE:RIG)
Beneish M-Score
-4.22 (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 -4.22 suggests that the company is not a manipulator.

RIG' s 10-Year Beneish M-Score Range
Min: -4.22   Max: 2.47
Current: -4.22

-4.22
2.47

During the past 13 years, the highest Beneish M-Score of Transocean Ltd was 2.47. The lowest was -4.22. And the median was -2.54.


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 * 0.9243+0.528 * 0.7902+0.404 * 0.1808+0.892 * 0.8825+0.115 * 0.8825
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8823+4.679 * -0.2388-0.327 * 1.0323
=-4.22

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $1,806 Mil.
Revenue was 1884 + 2043 + 2237 + 2270 = $8,434 Mil.
Gross Profit was 1687 + 959 + 927 + 952 = $4,525 Mil.
Total Current Assets was $6,719 Mil.
Total Assets was $26,973 Mil.
Property, Plant and Equipment(Net PPE) was $19,657 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,104 Mil.
Selling, General & Admin. Expense(SGA) was $204 Mil.
Total Current Liabilities was $2,902 Mil.
Long-Term Debt was $8,989 Mil.
Net Income was 342 + -483 + -739 + -2217 = $-3,097 Mil.
Non Operating Income was -5 + 47 + 10 + 6 = $58 Mil.
Cash Flow from Operations was 1311 + 526 + 566 + 882 = $3,285 Mil.
Accounts Receivable was $2,214 Mil.
Revenue was 2328 + 2339 + 2332 + 2558 = $9,557 Mil.
Gross Profit was 1115 + 1070 + 800 + 1067 = $4,052 Mil.
Total Current Assets was $5,760 Mil.
Total Assets was $32,067 Mil.
Property, Plant and Equipment(Net PPE) was $22,381 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,102 Mil.
Selling, General & Admin. Expense(SGA) was $262 Mil.
Total Current Liabilities was $3,397 Mil.
Long-Term Debt was $10,298 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)
=(1806 / 8434) / (2214 / 9557)
=0.21413327 / 0.23166266
=0.9243

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)
=(959 / 9557) / (1687 / 8434)
=0.42398242 / 0.53651885
=0.7902

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 - (6719 + 19657) / 26973) / (1 - (5760 + 22381) / 32067)
=0.02213324 / 0.12243116
=0.1808

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
=8434 / 9557
=0.8825

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))
=(1102 / (1102 + 22381)) / (1104 / (1104 + 19657))
=0.04692756 / 0.05317663
=0.8825

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)
=(204 / 8434) / (262 / 9557)
=0.02418781 / 0.02741446
=0.8823

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)
=((8989 + 2902) / 26973) / ((10298 + 3397) / 32067)
=0.44084826 / 0.42707456
=1.0323

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
=(-3097 - 58 - 3285) / 26973
=-0.2388

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 -4.22 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 1.22691.15351.44750.65230.91331.0121.07310.94121.05561.0201
GMI 0.83860.91020.78890.97651.04011.19291.94650.71160.86290.879
AQI 0.94550.93521.22360.9590.96241.01370.56710.97840.90540.2462
SGI 1.10641.34231.64271.98750.91180.82870.95471.00591.03130.9673
DEPI 1.20091.07582.69470.55780.70630.75241.10751.19181.02590.9674
SGAI 1.01180.8940.96050.70511.15191.42621.22130.97340.98340.8458
LVGI 0.75441.82241.49480.80220.83390.95881.35551.00610.88581.0547
TATA -0.0336-0.0276-0.0149-0.027-0.0664-0.0805-0.2117-0.084-0.0148-0.1462
M-score -2.34-2.48-1.55-2.01-2.95-2.98-3.26-3.06-2.54-3.54

Transocean Ltd Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 0.92991.01851.13351.10471.03241.02480.93441.02010.96050.9243
GMI 0.77570.43130.53360.8390.78370.97030.94770.8790.91950.7902
AQI 1.01540.94280.98390.90540.88830.91870.50270.24620.20940.1808
SGI 1.01730.9730.96540.98551.01431.02630.98290.96730.92230.8825
DEPI 1.29161.3641.11521.02590.97670.9190.99350.96740.88920.8825
SGAI 0.94910.94290.93741.02920.97180.91830.91050.84580.8760.8823
LVGI 0.92760.91850.85530.88580.93350.95521.03111.05471.09561.0323
TATA -0.0658-0.0462-0.0123-0.0148-0.0118-0.0106-0.1126-0.1462-0.2041-0.2388
M-score -2.88-2.95-2.63-2.55-2.63-2.51-3.31-3.54-3.93-4.22
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