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Transocean Ltd (NYSE:RIG)
Beneish M-Score
-2.60 (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 -2.60 suggests that the company is not a manipulator.

RIG' s 10-Year Beneish M-Score Range
Min: -3.72   Max: 0.97
Current: -2.6

-3.72
0.97

During the past 13 years, the highest Beneish M-Score of Transocean Ltd was 0.97. The lowest was -3.72. And the median was -2.51.


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 * 1.0085+0.528 * 0.8036+0.404 * 0.8883+0.892 * 1.0384+0.115 * 1.1411
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9493+4.679 * -0.0118-0.327 * 0.9335
=-2.60

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $2,217 Mil.
Revenue was 2339 + 2332 + 2558 + 2397 = $9,626 Mil.
Gross Profit was 1070 + 800 + 1067 + 1004 = $3,941 Mil.
Total Current Assets was $5,633 Mil.
Total Assets was $31,897 Mil.
Property, Plant and Equipment(Net PPE) was $22,353 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,097 Mil.
Selling, General & Admin. Expense(SGA) was $276 Mil.
Total Current Liabilities was $2,763 Mil.
Long-Term Debt was $10,308 Mil.
Net Income was 456 + 233 + 546 + 307 = $1,542 Mil.
Non Operating Income was -2 + -7 + -4 + -16 = $-29 Mil.
Cash Flow from Operations was 136 + 773 + 623 + 416 = $1,948 Mil.
Accounts Receivable was $2,117 Mil.
Revenue was 2184 + 2326 + 2431 + 2329 = $9,270 Mil.
Gross Profit was 828 + 888 + 1110 + 224 = $3,050 Mil.
Total Current Assets was $7,133 Mil.
Total Assets was $32,675 Mil.
Property, Plant and Equipment(Net PPE) was $21,032 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,186 Mil.
Selling, General & Admin. Expense(SGA) was $280 Mil.
Total Current Liabilities was $3,376 Mil.
Long-Term Debt was $10,967 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)
=(2217 / 9626) / (2117 / 9270)
=0.23031373 / 0.22837109
=1.0085

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)
=(800 / 9270) / (1070 / 9626)
=0.32901834 / 0.40941201
=0.8036

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 - (5633 + 22353) / 31897) / (1 - (7133 + 21032) / 32675)
=0.12261341 / 0.13802601
=0.8883

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
=9626 / 9270
=1.0384

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))
=(1186 / (1186 + 21032)) / (1097 / (1097 + 22353))
=0.05338014 / 0.04678038
=1.1411

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)
=(276 / 9626) / (280 / 9270)
=0.02867235 / 0.03020496
=0.9493

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)
=((10308 + 2763) / 31897) / ((10967 + 3376) / 32675)
=0.40978775 / 0.43895945
=0.9335

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
=(1542 - -29 - 1948) / 31897
=-0.0118

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 -2.60 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 0.8571.22691.17461.52510.6080.91331.21911.07740.88250.9529
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 -2.66-2.34-2.46-1.47-2.05-2.95-2.92-3.11-3.12-2.61

Transocean Ltd Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 1.01460.91660.87260.83850.93710.86630.90051.03190.95421.0085
GMI 1.97131.67022.10421.49550.70840.75610.43960.55810.86030.8036
AQI 0.76970.55380.56730.50460.72081.01540.94280.98390.90540.8883
SGI 1.07231.12991.15141.26081.07881.09191.10051.06051.02991.0384
DEPI 0.83640.97070.97340.53220.90020.79860.82681.13751.12741.1411
SGAI 1.09181.02661.020.90950.90760.88430.83370.85330.98470.9493
LVGI 1.35951.35221.31721.39631.00320.92760.91850.85530.88580.9335
TATA -0.2138-0.2281-0.2457-0.2599-0.084-0.0658-0.0462-0.0123-0.0148-0.0118
M-score -3.13-3.46-3.31-3.72-3.12-2.93-2.98-2.61-2.62-2.60
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