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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.
During the past 13 years, the highest Beneish M-Score of Schlumberger Ltd was -2.00. The lowest was -3.46. And the median was -2.48.
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 Schlumberger 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 * 1.3631||+||0.528 * 1.4858||+||0.404 * 1.2988||+||0.892 * 0.7844||+||0.115 * 0.9632|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0422||+||4.679 * -0.0504||-||0.327 * 0.9627|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $9,387 Mil.|
Revenue was 7154 + 7073 + 7218 + 6565 = $28,010 Mil.
Gross Profit was 961 + 931 + 903 + 1105 = $3,900 Mil.
Total Current Assets was $23,927 Mil.
Total Assets was $77,956 Mil.
Property, Plant and Equipment(Net PPE) was $12,821 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,094 Mil.
Selling, General & Admin. Expense(SGA) was $403 Mil.
Total Current Liabilities was $15,059 Mil.
Long-Term Debt was $16,463 Mil.
Net Income was -205 + 176 + -2160 + 501 = $-1,688 Mil.
Non Operating Income was -723 + -291 + -2962 + -45 = $-4,021 Mil.
Cash Flow from Operations was 2013 + 1406 + 1632 + 1210 = $6,261 Mil.
|Accounts Receivable was $8,780 Mil.
Revenue was 7825 + 8532 + 9057 + 10297 = $35,711 Mil.
Gross Profit was 1532 + 1734 + 1921 + 2201 = $7,388 Mil.
Total Current Assets was $26,912 Mil.
Total Assets was $68,005 Mil.
Property, Plant and Equipment(Net PPE) was $13,415 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,078 Mil.
Selling, General & Admin. Expense(SGA) was $493 Mil.
Total Current Liabilities was $14,121 Mil.
Long-Term Debt was $14,442 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)|
|=||(9387 / 28010)||/||(8780 / 35711)|
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)|
|=||(7388 / 35711)||/||(3900 / 28010)|
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 - (23927 + 12821) / 77956)||/||(1 - (26912 + 13415) / 68005)|
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))|
|=||(4078 / (4078 + 13415))||/||(4094 / (4094 + 12821))|
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)|
|=||(403 / 28010)||/||(493 / 35711)|
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)|
|=||((16463 + 15059) / 77956)||/||((14442 + 14121) / 68005)|
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|
|=||(-1688 - -4021||-||6261)||/||77956|
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.
Schlumberger Ltd has a M-score of -2.20 signals that the company is likely to 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
Schlumberger Ltd Annual Data
Schlumberger Ltd Quarterly Data