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Transocean Ltd (NYSE:RIG)
Beneish M-Score
-3.40 (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 -3.40 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: -3.4

-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 * 0.7399+0.528 * 0.7175+0.404 * 0.9734+0.892 * 0.7529+0.115 * 1.3085
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1317+4.679 * -0.0777-0.327 * 0.8352
=-3.40

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $1,094 Mil.
Revenue was 1341 + 1851 + 1608 + 1884 = $6,684 Mil.
Gross Profit was 676 + 1057 + 728 + 1687 = $4,148 Mil.
Total Current Assets was $4,700 Mil.
Total Assets was $26,245 Mil.
Property, Plant and Equipment(Net PPE) was $20,889 Mil.
Depreciation, Depletion and Amortization(DDA) was $878 Mil.
Selling, General & Admin. Expense(SGA) was $190 Mil.
Total Current Liabilities was $2,588 Mil.
Long-Term Debt was $7,253 Mil.
Net Income was 249 + 611 + 321 + 342 = $1,523 Mil.
Non Operating Income was -1 + 15 + 3 + -5 = $12 Mil.
Cash Flow from Operations was 631 + 960 + 648 + 1311 = $3,550 Mil.
Accounts Receivable was $1,964 Mil.
Revenue was 2043 + 2237 + 2270 + 2328 = $8,878 Mil.
Gross Profit was 959 + 927 + 952 + 1115 = $3,953 Mil.
Total Current Assets was $5,843 Mil.
Total Assets was $27,105 Mil.
Property, Plant and Equipment(Net PPE) was $20,566 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,146 Mil.
Selling, General & Admin. Expense(SGA) was $223 Mil.
Total Current Liabilities was $3,173 Mil.
Long-Term Debt was $8,996 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)
=(1094 / 6684) / (1964 / 8878)
=0.16367445 / 0.221221
=0.7399

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)
=(1057 / 8878) / (676 / 6684)
=0.44525794 / 0.62058648
=0.7175

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 - (4700 + 20889) / 26245) / (1 - (5843 + 20566) / 27105)
=0.02499524 / 0.02567792
=0.9734

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
=6684 / 8878
=0.7529

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))
=(1146 / (1146 + 20566)) / (878 / (878 + 20889))
=0.05278187 / 0.04033629
=1.3085

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)
=(190 / 6684) / (223 / 8878)
=0.02842609 / 0.02511827
=1.1317

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)
=((7253 + 2588) / 26245) / ((8996 + 3173) / 27105)
=0.37496666 / 0.44895776
=0.8352

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
=(1523 - 12 - 3550) / 26245
=-0.0777

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 -3.40 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 1.15341.44750.65230.91331.0121.07310.94121.05561.02010.8004
GMI 0.91030.78890.97651.04011.19291.94650.71160.86290.8790.7384
AQI 0.93521.22360.9590.96241.01370.76970.72080.90540.33410.6604
SGI 1.34251.64271.98750.91180.82870.95471.00591.03130.96730.8051
DEPI 1.07632.69470.55780.70630.75241.02691.28531.02590.96741.1388
SGAI 0.89630.96050.70511.15191.42621.22130.97340.98340.84581.0245
LVGI 1.82241.49480.80220.83390.95881.35951.00320.88581.04550.8542
TATA 0.0077-0.0067-0.0222-0.0664-0.0805-0.2121-0.084-0.0148-0.1454-0.1031
M-score -2.31-1.51-1.99-2.95-2.98-3.19-3.15-2.54-3.50-3.54

Transocean Ltd Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.05291.00441.01650.90680.99480.93840.90610.8060.80040.7399
GMI 0.8650.80790.98090.97520.90040.93880.80360.77240.73840.7175
AQI 0.90540.88830.91870.50270.33410.20940.18080.35060.66040.9734
SGI 1.0341.04271.03471.01290.99190.94410.90030.84580.80510.7529
DEPI 1.12741.14111.08720.99430.96740.88630.87951.01771.13421.3085
SGAI 0.98080.94540.91090.88350.82490.85580.86490.9431.02451.1317
LVGI 0.88580.93350.95521.03111.04551.09561.03230.89620.85420.8352
TATA -0.0148-0.0118-0.0106-0.1125-0.1454-0.2041-0.2388-0.1419-0.1031-0.0777
M-score -2.52-2.59-2.49-3.29-3.48-3.91-4.21-3.80-3.54-3.40
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