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Transocean Ltd (NYSE:RIG)
Beneish M-Score
-2.62 (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 -2.62 suggests that the company is not a manipulator.

RIG' s 10-Year Beneish M-Score Range
Min: -3.67   Max: 0.97
Current: -2.62

-3.67
0.97

During the past 13 years, the highest Beneish M-Score of Transocean Ltd was 0.97. The lowest was -3.67. And the median was -2.47.


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 * 0.9529+0.528 * 0.8629+0.404 * 0.9054+0.892 * 1.0313+0.115 * 1.1274
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9834+4.679 * -0.0148-0.327 * 0.8858
=-2.62

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $2,162 Mil.
Revenue was 2332 + 2558 + 2397 + 2197 = $9,484 Mil.
Gross Profit was 800 + 1067 + 1004 + 822 = $3,693 Mil.
Total Current Assets was $6,772 Mil.
Total Assets was $32,546 Mil.
Property, Plant and Equipment(Net PPE) was $21,707 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,094 Mil.
Selling, General & Admin. Expense(SGA) was $286 Mil.
Total Current Liabilities was $3,554 Mil.
Long-Term Debt was $10,379 Mil.
Net Income was 233 + 546 + 307 + 321 = $1,407 Mil.
Non Operating Income was -7 + -4 + -16 + -1 = $-28 Mil.
Cash Flow from Operations was 773 + 623 + 416 + 106 = $1,918 Mil.
Accounts Receivable was $2,200 Mil.
Revenue was 2326 + 2431 + 2329 + 2110 = $9,196 Mil.
Gross Profit was 888 + 1110 + 224 + 868 = $3,090 Mil.
Total Current Assets was $8,647 Mil.
Total Assets was $34,255 Mil.
Property, Plant and Equipment(Net PPE) was $20,880 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,194 Mil.
Selling, General & Admin. Expense(SGA) was $282 Mil.
Total Current Liabilities was $5,463 Mil.
Long-Term Debt was $11,092 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)
=(2162 / 9484) / (2200 / 9196)
=0.22796288 / 0.23923445
=0.9529

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)
=(1067 / 9196) / (800 / 9484)
=0.33601566 / 0.38939266
=0.8629

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 - (6772 + 21707) / 32546) / (1 - (8647 + 20880) / 34255)
=0.12496159 / 0.13802365
=0.9054

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
=9484 / 9196
=1.0313

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))
=(1194 / (1194 + 20880)) / (1094 / (1094 + 21707))
=0.05409079 / 0.04798035
=1.1274

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)
=(286 / 9484) / (282 / 9196)
=0.03015605 / 0.03066551
=0.9834

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)
=((10379 + 3554) / 32546) / ((11092 + 5463) / 34255)
=0.42810176 / 0.48328711
=0.8858

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
=(1407 - -28 - 1918) / 32546
=-0.0148

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 -2.62 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

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.26621.01460.91660.87260.83850.93710.86510.89931.03050.9529
GMI 1.49871.97131.67022.10421.49550.70840.75860.44090.55980.8629
AQI 1.09770.76970.55380.56730.50460.72081.01540.94280.98390.9054
SGI 0.70281.07231.12991.15141.26081.07881.09341.10211.0621.0313
DEPI 2.00320.83640.97070.97340.53220.90020.79860.82681.13751.1274
SGAI 1.67461.09181.02661.020.90950.90760.8830.83250.85210.9834
LVGI 0.90821.35951.35221.31721.39631.00320.92760.91850.85530.8858
TATA -0.0628-0.2138-0.2281-0.2457-0.2599-0.084-0.0658-0.0462-0.0123-0.0148
M-score -2.46-3.13-3.46-3.31-3.72-3.12-2.93-2.98-2.60-2.62
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