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Weatherford International PLC (NYSE:WFT)
Beneish M-Score
-3.02 (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 -3.02 suggests that the company is not a manipulator.

WFT' s 10-Year Beneish M-Score Range
Min: -2.97   Max: 4.03
Current: -3.02

-2.97
4.03

During the past 13 years, the highest Beneish M-Score of Weatherford International PLC was 4.03. The lowest was -2.97. And the median was -2.40.


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 * 0.9124+0.528 * 2.0211+0.404 * 0.8624+0.892 * 0.954+0.115 * 0.889
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 4.2671+4.679 * -0.0632-0.327 * 1.0939
=-3.02

* 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 $3,340 Mil.
Revenue was 3711 + 3596 + 3738 + 3820 = $14,865 Mil.
Gross Profit was 882 + 3194 + 604 + 502 = $5,182 Mil.
Total Current Assets was $9,718 Mil.
Total Assets was $21,813 Mil.
Property, Plant and Equipment(Net PPE) was $7,588 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,421 Mil.
Selling, General & Admin. Expense(SGA) was $745 Mil.
Total Current Liabilities was $5,801 Mil.
Long-Term Debt was $7,021 Mil.
Net Income was -145 + -41 + -271 + 22 = $-435 Mil.
Non Operating Income was -19 + -9 + -16 + -30 = $-74 Mil.
Cash Flow from Operations was 435 + -406 + 662 + 326 = $1,017 Mil.
Accounts Receivable was $3,837 Mil.
Revenue was 3868 + 3837 + 4058 + 3818 = $15,581 Mil.
Gross Profit was 3462 + 3405 + 3590 + 521 = $10,978 Mil.
Total Current Assets was $7,769 Mil.
Total Assets was $21,175 Mil.
Property, Plant and Equipment(Net PPE) was $8,333 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,359 Mil.
Selling, General & Admin. Expense(SGA) was $183 Mil.
Total Current Liabilities was $4,292 Mil.
Long-Term Debt was $7,087 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)
=(3340 / 14865) / (3837 / 15581)
=0.22468887 / 0.24626147
=0.9124

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)
=(3194 / 15581) / (882 / 14865)
=0.70457609 / 0.3486041
=2.0211

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 - (9718 + 7588) / 21813) / (1 - (7769 + 8333) / 21175)
=0.20661991 / 0.23957497
=0.8624

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
=14865 / 15581
=0.954

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))
=(1359 / (1359 + 8333)) / (1421 / (1421 + 7588))
=0.14021874 / 0.15773116
=0.889

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)
=(745 / 14865) / (183 / 15581)
=0.05011773 / 0.01174507
=4.2671

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)
=((7021 + 5801) / 21813) / ((7087 + 4292) / 21175)
=0.58781461 / 0.53737898
=1.0939

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
=(-435 - -74 - 1017) / 21813
=-0.0632

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 -3.02 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.

Weatherford International PLC Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.09161.22680.81591.05581.01581.11450.90440.97041.0260.9222
GMI 0.95670.97390.88821.01531.01281.30422.00530.15690.98084.4812
AQI 0.87941.03870.89220.93130.8741.00470.95820.9840.83690.9173
SGI 1.22241.38361.51831.19051.22580.92011.15611.27211.17121.0032
DEPI 0.98191.29690.91371.09531.1580.95590.87690.97281.00790.9324
SGAI 0.98510.89950.92670.95581.05491.27350.1020.88710.846510.3958
LVGI 0.86130.82311.16081.12251.15280.99511.01191.08291.11481.0373
TATA -0.0479-0.0194-0.01750.01570.0202-0.0252-0.04760.0013-0.0833-0.0636
M-score -2.45-1.91-2.42-2.23-2.25-2.45-2.00-2.72-2.78-2.68

Weatherford International PLC Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.89940.93881.00671.02341.01640.98690.97920.92450.99720.9124
GMI 0.63361.08011.48851.68951.62640.93470.68650.96581.00632.0211
AQI 0.97270.87660.85030.83690.84640.95070.97660.91730.92910.8624
SGI 1.27731.27231.22131.17421.1281.07761.04551.00070.96970.954
DEPI 0.99250.99261.03191.00790.95880.94760.92930.93240.94380.889
SGAI 0.30540.33420.34121.01030.69570.68410.7513.18944.13044.2671
LVGI 1.03021.12121.11161.11481.0540.97971.03961.03731.07471.0939
TATA -0.0175-0.0077-0.0114-0.0319-0.0273-0.0481-0.0557-0.0636-0.0577-0.0632
M-score -2.50-2.26-2.05-2.19-2.18-2.65-2.87-3.29-3.37-3.02
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