Switch to:
Transocean Ltd (NYSE:RIG)
Beneish M-Score
-2.54 (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 -2.49 suggests that the company is not a manipulator.

RIG' s 10-Year Beneish M-Score Range
Min: -4.34   Max: 2.45
Current: -2.54

-4.34
2.45

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.


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 * 1.024+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
=-2.49

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

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

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)
=(2214 / 9557) / (2105 / 9305)
=0.23166266 / 0.22622246
=1.024

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)
=(1070 / 9305) / (1115 / 9557)
=0.41192907 / 0.42398242
=0.9716

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 - (5760 + 22381) / 32067) / (1 - (6866 + 21056) / 32215)
=0.12243116 / 0.1332609
=0.9187

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
=9557 / 9305
=1.0271

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))
=0.05101857 / 0.04692756
=1.0872

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)
=0.02741446 / 0.02987641
=0.9176

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)
=0.42707456 / 0.44708986
=0.9552

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
=(1822 - -5 - 2168) / 32067
=-0.0106

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.


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 0.8571.22691.17461.52510.6080.91331.0121.13971.00510.9529
GMI 0.99670.83860.91020.78890.97651.04011.19291.94650.71160.8629
AQI 1.15850.94550.93521.22360.9590.96241.01370.56710.97840.9054
SGI 1.07381.10641.34231.64271.98750.91180.82870.95471.00591.0313
DEPI 0.84981.20091.07582.69470.55780.70630.75241.10751.02771.1897
SGAI 0.95551.01180.8940.96050.70511.15191.42621.22130.97340.9834
LVGI 0.76040.75441.82241.49480.80220.83390.95881.35551.00610.8858
TATA -0.0519-0.0336-0.0276-0.0149-0.027-0.0664-0.0805-0.2117-0.084-0.0148
M-score -2.66-2.34-2.46-1.47-2.05-2.95-2.98-3.20-3.02-2.61

Transocean Ltd Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1.03680.98751.01031.00510.92940.96951.07810.95751.0121.024
GMI 1.68882.1761.59420.71160.75720.44030.55150.85660.80030.9716
AQI 0.55380.56730.50460.97841.01540.94280.98390.90540.88830.9187
SGI 0.99891.01741.04641.00591.01781.02221.01511.02631.03481.0271
DEPI 1.14911.14931.08651.08451.05641.09811.21421.12741.14111.0872
SGAI 1.15661.14981.09170.97340.94860.89760.89150.98820.95250.9176
LVGI 1.35221.31721.39631.00610.92760.91850.85530.88580.93350.9552
TATA -0.2264-0.2449-0.2579-0.084-0.0658-0.0462-0.0123-0.0148-0.0118-0.0106
M-score -3.45-3.29-3.66-3.01-2.92-2.97-2.60-2.62-2.60-2.49
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK