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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 -2.62 suggests that the company is not a manipulator.
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.
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|
|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
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)|
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)|
|=||(1067 / 9196)||/||(800 / 9484)|
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 - (6772 + 21707) / 32546)||/||(1 - (8647 + 20880) / 34255)|
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))|
|=||(1194 / (1194 + 20880))||/||(1094 / (1094 + 21707))|
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)|
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)|
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|
|=||(1407 - -28||-||1918)||/||32546|
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.
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