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Transocean Ltd (NYSE:RIG)
Beneish M-Score
-3.10 (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 -3.10 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: -3.1

-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 -2.52.


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 * 0.7611+0.528 * 1.061+0.404 * 1.0859+0.892 * 0.6809+0.115 * 1.3664
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.3534+4.679 * -0.0482-0.327 * 0.8212
=-3.10

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $936 Mil.
Revenue was 943 + 1341 + 1851 + 1608 = $5,743 Mil.
Gross Profit was 443 + 676 + 1057 + 728 = $2,904 Mil.
Total Current Assets was $4,129 Mil.
Total Assets was $25,839 Mil.
Property, Plant and Equipment(Net PPE) was $21,089 Mil.
Depreciation, Depletion and Amortization(DDA) was $857 Mil.
Selling, General & Admin. Expense(SGA) was $188 Mil.
Total Current Liabilities was $2,199 Mil.
Long-Term Debt was $7,155 Mil.
Net Income was 77 + 249 + 611 + 321 = $1,258 Mil.
Non Operating Income was 41 + -1 + 15 + 3 = $58 Mil.
Cash Flow from Operations was 207 + 631 + 960 + 648 = $2,446 Mil.
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 $1,108 Mil.
Selling, General & Admin. Expense(SGA) was $204 Mil.
Total Current Liabilities was $2,902 Mil.
Long-Term Debt was $8,989 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)
=(936 / 5743) / (1806 / 8434)
=0.16298102 / 0.21413327
=0.7611

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)
=(4525 / 8434) / (2904 / 5743)
=0.53651885 / 0.50565906
=1.061

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 - (4129 + 21089) / 25839) / (1 - (6719 + 19657) / 26973)
=0.02403344 / 0.02213324
=1.0859

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
=5743 / 8434
=0.6809

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))
=(1108 / (1108 + 19657)) / (857 / (857 + 21089))
=0.05335902 / 0.0390504
=1.3664

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)
=(188 / 5743) / (204 / 8434)
=0.0327355 / 0.02418781
=1.3534

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)
=((7155 + 2199) / 25839) / ((8989 + 2902) / 26973)
=0.36201091 / 0.44084826
=0.8212

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
=(1258 - 58 - 2446) / 25839
=-0.0482

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 -3.10 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.15351.44750.65230.91331.21911.01450.84961.05290.99480.8004
GMI 0.91020.78890.97651.04011.18322.03820.66730.86570.89960.7384
AQI 0.93521.22360.9590.96241.01370.76970.72080.90540.33410.6604
SGI 1.34231.64271.98750.91180.68791.00981.11441.0340.99190.8051
DEPI 1.07582.69470.55780.70631.20030.64291.10981.18970.96741.1388
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 -2.31-1.51-2.01-2.95-2.92-3.19-3.17-2.52-3.48-3.54

Transocean Ltd Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 1.00441.01650.90680.99480.93840.90610.8060.80040.73990.7611
GMI 0.80790.98090.97520.90040.93880.80360.77240.73840.71751.061
AQI 0.88830.91870.50270.33410.20940.18080.35060.66040.97341.0859
SGI 1.04271.03471.01290.99190.94410.90030.84580.80510.75290.6809
DEPI 1.14111.08720.99430.96740.88630.87951.01771.13421.30851.3664
SGAI 0.94540.91090.88350.82490.85580.86490.9431.02451.13171.3534
LVGI 0.93350.95521.03111.04551.09561.03230.89620.85420.83520.8212
TATA -0.0118-0.0106-0.1125-0.1454-0.2041-0.2388-0.1419-0.1031-0.0777-0.0482
M-score -2.59-2.49-3.29-3.48-3.91-4.21-3.80-3.54-3.40-3.10
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