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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 -1.69. The lowest was -3.87. And the median was -2.52.
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 * 0.8205||+||0.528 * 1.0124||+||0.404 * 1.056||+||0.892 * 0.952||+||0.115 * 0.9163|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1345||+||4.679 * -0.0709||-||0.327 * 1.003|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $9,569 Mil.|
Revenue was 9057 + 10297 + 12712 + 12725 = $44,791 Mil.
Gross Profit was 1921 + 2201 + 3022 + 3036 = $10,180 Mil.
Total Current Assets was $22,861 Mil.
Total Assets was $64,753 Mil.
Property, Plant and Equipment(Net PPE) was $14,848 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,186 Mil.
Selling, General & Admin. Expense(SGA) was $486 Mil.
Total Current Liabilities was $13,774 Mil.
Long-Term Debt was $9,110 Mil.
Net Income was 1124 + 975 + 302 + 1949 = $4,350 Mil.
Non Operating Income was -47 + -439 + -1553 + -79 = $-2,118 Mil.
Cash Flow from Operations was 2314 + 1770 + 3913 + 3063 = $11,060 Mil.
|Accounts Receivable was $12,251 Mil.
Revenue was 12118 + 11315 + 11966 + 11651 = $47,050 Mil.
Gross Profit was 2849 + 2570 + 2682 + 2725 = $10,826 Mil.
Total Current Assets was $25,414 Mil.
Total Assets was $68,086 Mil.
Property, Plant and Equipment(Net PPE) was $15,743 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,973 Mil.
Selling, General & Admin. Expense(SGA) was $450 Mil.
Total Current Liabilities was $12,251 Mil.
Long-Term Debt was $11,740 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)|
|=||(9569 / 44791)||/||(12251 / 47050)|
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)|
|=||(2201 / 47050)||/||(1921 / 44791)|
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 - (22861 + 14848) / 64753)||/||(1 - (25414 + 15743) / 68086)|
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))|
|=||(3973 / (3973 + 15743))||/||(4186 / (4186 + 14848))|
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)|
|=||(486 / 44791)||/||(450 / 47050)|
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)|
|=||((9110 + 13774) / 64753)||/||((11740 + 12251) / 68086)|
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|
|=||(4350 - -2118||-||11060)||/||64753|
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 -3.02 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