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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 -2.49 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Transocean Ltd was 2.45. The lowest was -4.34. And the median was -2.56.
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 * 1.024||+||0.528 * 0.9716||+||0.404 * 0.9187||+||0.892 * 1.0271||+||0.115 * 1.0872|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9176||+||4.679 * -0.0106||-||0.327 * 0.9552|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|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.
Net Income was 587 + 456 + 233 + 546 = $1,822 Mil.
Non Operating Income was 8 + -2 + -7 + -4 = $-5 Mil.
Cash Flow from Operations was 636 + 136 + 773 + 623 = $2,168 Mil.
|Accounts Receivable was $2,105 Mil.
Revenue was 2364 + 2184 + 2326 + 2431 = $9,305 Mil.
Gross Profit was 1007 + 828 + 888 + 1110 = $3,833 Mil.
Total Current Assets was $6,866 Mil.
Total Assets was $32,215 Mil.
Property, Plant and Equipment(Net PPE) was $21,056 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,132 Mil.
Selling, General & Admin. Expense(SGA) was $278 Mil.
Total Current Liabilities was $3,795 Mil.
Long-Term Debt was $10,608 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(2214 / 9557)||/||(2105 / 9305)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(1070 / 9305)||/||(1115 / 9557)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (5760 + 22381) / 32067)||/||(1 - (6866 + 21056) / 32215)|
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.
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))|
|=||(1132 / (1132 + 21056))||/||(1102 / (1102 + 22381))|
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)|
|=||(262 / 9557)||/||(278 / 9305)|
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)|
|=||((10298 + 3397) / 32067)||/||((10608 + 3795) / 32215)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(1822 - -5||-||2168)||/||32067|
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 -2.49 suggests that the company will not be a manipulator.
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
Transocean Ltd Annual Data
Transocean Ltd Quarterly Data