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GuruFocus has detected 4 Warning Signs with Weatherford International PLC $WFT.
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Weatherford International PLC (NYSE:WFT)
Beneish M-Score
-3.43 (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.

Weatherford International PLC has a M-score of -3.43 suggests that the company is not a manipulator.

WFT' s Beneish M-Score Range Over the Past 10 Years
Min: -3.44   Max: 4.03
Current: -3.43

-3.44
4.03

During the past 13 years, the highest Beneish M-Score of Weatherford International PLC was 4.03. The lowest was -3.44. And the median was -2.44.


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 Weatherford International PLC 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 * 1.2741+0.528 * 1.5367+0.404 * 1.085+0.892 * 0.6095+0.115 * 0.9919
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1527+4.679 * -0.233-0.327 * 1.1594
=-3.43

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $1,383 Mil.
Revenue was 1406 + 1356 + 1402 + 1585 = $5,749 Mil.
Gross Profit was 159 + 126 + 164 + 111 = $560 Mil.
Total Current Assets was $4,910 Mil.
Total Assets was $12,664 Mil.
Property, Plant and Equipment(Net PPE) was $4,480 Mil.
Depreciation, Depletion and Amortization(DDA) was $956 Mil.
Selling, General & Admin. Expense(SGA) was $1,117 Mil.
Total Current Liabilities was $2,428 Mil.
Long-Term Debt was $7,403 Mil.
Net Income was -549 + -1780 + -565 + -498 = $-3,392 Mil.
Non Operating Income was -2 + -10 + -85 + -30 = $-127 Mil.
Cash Flow from Operations was 136 + -106 + -139 + -205 = $-314 Mil.
Accounts Receivable was $1,781 Mil.
Revenue was 2012 + 2237 + 2390 + 2794 = $9,433 Mil.
Gross Profit was 78 + 368 + 374 + 592 = $1,412 Mil.
Total Current Assets was $5,564 Mil.
Total Assets was $14,760 Mil.
Property, Plant and Equipment(Net PPE) was $5,679 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,200 Mil.
Selling, General & Admin. Expense(SGA) was $1,590 Mil.
Total Current Liabilities was $4,031 Mil.
Long-Term Debt was $5,852 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)
=(1383 / 5749) / (1781 / 9433)
=0.24056358 / 0.18880526
=1.2741

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)
=(1412 / 9433) / (560 / 5749)
=0.14968727 / 0.09740824
=1.5367

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 - (4910 + 4480) / 12664) / (1 - (5564 + 5679) / 14760)
=0.25852811 / 0.23827913
=1.085

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
=5749 / 9433
=0.6095

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))
=(1200 / (1200 + 5679)) / (956 / (956 + 4480))
=0.17444396 / 0.17586461
=0.9919

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)
=(1117 / 5749) / (1590 / 9433)
=0.19429466 / 0.16855719
=1.1527

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)
=((7403 + 2428) / 12664) / ((5852 + 4031) / 14760)
=0.77629501 / 0.66957995
=1.1594

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
=(-3392 - -127 - -314) / 12664
=-0.233

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.

Weatherford International PLC has a M-score of -3.43 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 local exchange's currency.

Weatherford International PLC Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.05581.01581.11450.9070.96781.02580.85980.9210.93381.2741
GMI 1.01531.01281.30421.04191.011.1541.13830.83851.54571.5367
AQI 0.93130.8741.00470.98690.95540.83690.82611.02131.17761.085
SGI 1.19051.22580.92011.15711.27071.17151.00320.97690.63260.6095
DEPI 1.09531.1580.95590.87750.97221.00790.86760.95550.92530.9919
SGAI 0.95581.05491.27350.95430.84310.9421.05031.01011.23821.1517
LVGI 1.12251.15280.99511.04941.04421.11481.0420.98261.16841.1594
TATA 0.01570.0202-0.0252-0.061-0.0264-0.0833-0.0636-0.068-0.1768-0.233
M-score -2.23-2.25-2.45-2.72-2.40-2.70-2.94-2.97-3.44-3.43

Weatherford International PLC Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.86460.9210.75240.78620.82570.93381.10391.1611.21291.2741
GMI 0.94660.83850.82540.93771.12251.54572.05672.17942.56231.5367
AQI 0.87851.02130.93151.06381.10591.17761.24861.23021.13781.085
SGI 0.95760.97690.93920.86030.74710.63260.58290.56580.57010.6095
DEPI 0.89650.95550.90510.9750.95570.92530.94120.95360.92930.9919
SGAI 1.08361.01111.02821.09091.15421.24611.27991.24341.25981.1527
LVGI 0.99490.98260.99431.00381.04311.16841.09691.13741.27821.1594
TATA -0.066-0.068-0.0932-0.1068-0.1136-0.1768-0.1952-0.1721-0.3009-0.233
M-score -3.05-2.97-3.33-3.33-3.34-3.44-3.10-2.90-3.34-3.43
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