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Transocean Ltd (NYSE:RIG)
Beneish M-Score
-3.44 (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 -3.44 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: -3.44

-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 * 0.8004+0.528 * 0.7384+0.404 * 0.8964+0.892 * 0.8051+0.115 * 1.1388
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0245+4.679 * -0.1031-0.327 * 0.8467
=-3.44

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $1,343 Mil.
Revenue was 1851 + 1608 + 1884 + 2043 = $7,386 Mil.
Gross Profit was 1057 + 728 + 1687 + 959 = $4,431 Mil.
Total Current Assets was $4,785 Mil.
Total Assets was $26,329 Mil.
Property, Plant and Equipment(Net PPE) was $20,818 Mil.
Depreciation, Depletion and Amortization(DDA) was $948 Mil.
Selling, General & Admin. Expense(SGA) was $193 Mil.
Total Current Liabilities was $2,669 Mil.
Long-Term Debt was $7,397 Mil.
Net Income was 611 + 321 + 342 + -483 = $791 Mil.
Non Operating Income was 15 + 3 + -5 + 47 = $60 Mil.
Cash Flow from Operations was 960 + 648 + 1311 + 526 = $3,445 Mil.
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.



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)
=(1343 / 7386) / (2084 / 9174)
=0.18183049 / 0.22716372
=0.8004

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)
=(728 / 9174) / (1057 / 7386)
=0.44299106 / 0.59991877
=0.7384

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 - (4785 + 20818) / 26329) / (1 - (6001 + 21538) / 28413)
=0.02757416 / 0.03076057
=0.8964

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
=7386 / 9174
=0.8051

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))
=(1124 / (1124 + 21538)) / (948 / (948 + 20818))
=0.04959845 / 0.04355417
=1.1388

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)
=(193 / 7386) / (234 / 9174)
=0.02613052 / 0.02550687
=1.0245

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)
=((7397 + 2669) / 26329) / ((9059 + 3770) / 28413)
=0.38231608 / 0.45151867
=0.8467

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
=(791 - 60 - 3445) / 26329
=-0.1031

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 -3.44 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 1.15351.44750.65230.91331.0121.07310.94121.05561.02010.8004
GMI 0.91020.78890.97651.04011.19291.94650.71160.86290.8790.7384
AQI 0.93521.22360.9590.96241.01370.56710.97840.90540.24620.8964
SGI 1.34231.64271.98750.91180.82870.95471.00591.03130.96730.8051
DEPI 1.07582.69470.55780.70630.75241.10751.19181.02590.96741.1388
SGAI 0.8940.96050.70511.15191.42621.22130.97340.98340.84581.0245
LVGI 1.82241.49480.80220.83390.95881.35551.00610.88581.05470.8467
TATA 0.0077-0.0067-0.027-0.0664-0.0805-0.2117-0.084-0.0148-0.1462-0.1031
M-score -2.31-1.51-2.01-2.95-2.98-3.26-3.06-2.54-3.54-3.44

Transocean Ltd Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.10471.03241.02480.93441.02010.96050.92430.8130.80040.7399
GMI 0.8390.78370.97030.94770.8790.91950.79020.76750.73840.7175
AQI 0.90540.88830.91870.50270.24620.20940.18080.35060.89640.9734
SGI 0.98551.01431.02630.98290.96730.92230.88250.83850.80510.7529
DEPI 1.02590.97670.9190.99350.96740.88920.88251.02141.13881.3042
SGAI 1.02920.97180.91830.91050.84580.8760.88230.95121.02451.1317
LVGI 0.88580.93350.95521.03111.05471.09561.03230.89620.84670.8352
TATA -0.0148-0.0118-0.0106-0.1126-0.1462-0.2041-0.2388-0.1419-0.1031-0.0777
M-score -2.55-2.63-2.51-3.31-3.54-3.93-4.22-3.80-3.44-3.40
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