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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 -1.67. The lowest was -3.86. And the median was -2.55.
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 * 1.201||+||0.528 * 1.1798||+||0.404 * 0.9918||+||0.892 * 0.6683||+||0.115 * 0.9374|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.4811||+||4.679 * -0.0555||-||0.327 * 1.2138|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $8,382 Mil.|
Revenue was 6565 + 7825 + 8532 + 9057 = $31,979 Mil.
Gross Profit was 1105 + 1532 + 1734 + 1921 = $6,292 Mil.
Total Current Assets was $27,700 Mil.
Total Assets was $69,141 Mil.
Property, Plant and Equipment(Net PPE) was $13,259 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,003 Mil.
Selling, General & Admin. Expense(SGA) was $484 Mil.
Total Current Liabilities was $12,880 Mil.
Long-Term Debt was $17,233 Mil.
Net Income was 501 + -1016 + 989 + 1124 = $1,598 Mil.
Non Operating Income was -45 + -2656 + -60 + -47 = $-2,808 Mil.
Cash Flow from Operations was 1210 + 2178 + 2543 + 2314 = $8,245 Mil.
|Accounts Receivable was $10,443 Mil.
Revenue was 10297 + 12712 + 12725 + 12118 = $47,852 Mil.
Gross Profit was 2201 + 3022 + 3036 + 2849 = $11,108 Mil.
Total Current Assets was $23,394 Mil.
Total Assets was $65,411 Mil.
Property, Plant and Equipment(Net PPE) was $15,135 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,204 Mil.
Selling, General & Admin. Expense(SGA) was $489 Mil.
Total Current Liabilities was $14,572 Mil.
Long-Term Debt was $8,898 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)|
|=||(8382 / 31979)||/||(10443 / 47852)|
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)|
|=||(11108 / 47852)||/||(6292 / 31979)|
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 - (27700 + 13259) / 69141)||/||(1 - (23394 + 15135) / 65411)|
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))|
|=||(4204 / (4204 + 15135))||/||(4003 / (4003 + 13259))|
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)|
|=||(484 / 31979)||/||(489 / 47852)|
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)|
|=||((17233 + 12880) / 69141)||/||((8898 + 14572) / 65411)|
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|
|=||(1598 - -2808||-||8245)||/||69141|
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 -2.92 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
Schlumberger Ltd Annual Data
Schlumberger Ltd Quarterly Data