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Weatherford International PLC (NYSE:WFT)
Beneish M-Score
-3.34 (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 -3.34 suggests that the company is not a manipulator.

WFT' s Beneish M-Score Range Over the Past 10 Years
Min: -3.34   Max: 4.03
Current: -3.34

-3.34
4.03

During the past 13 years, the highest Beneish M-Score of Weatherford International PLC was 4.03. The lowest was -3.34. And the median was -2.42.


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 * 0.8257+0.528 * 1.1225+0.404 * 1.1059+0.892 * 0.7471+0.115 * 0.9557
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1542+4.679 * -0.1136-0.327 * 1.0431
=-3.34

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $2,045 Mil.
Revenue was 2237 + 2390 + 2794 + 3727 = $11,148 Mil.
Gross Profit was 368 + 374 + 592 + 819 = $2,153 Mil.
Total Current Assets was $6,515 Mil.
Total Assets was $16,799 Mil.
Property, Plant and Equipment(Net PPE) was $6,394 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,263 Mil.
Selling, General & Admin. Expense(SGA) was $1,760 Mil.
Total Current Liabilities was $4,025 Mil.
Long-Term Debt was $6,020 Mil.
Net Income was -170 + -489 + -118 + -475 = $-1,252 Mil.
Non Operating Income was -14 + -34 + -37 + -225 = $-310 Mil.
Cash Flow from Operations was 134 + 291 + -42 + 584 = $967 Mil.
Accounts Receivable was $3,315 Mil.
Revenue was 3877 + 3711 + 3596 + 3738 = $14,922 Mil.
Gross Profit was 992 + 882 + 757 + 604 = $3,235 Mil.
Total Current Assets was $8,927 Mil.
Total Assets was $20,727 Mil.
Property, Plant and Equipment(Net PPE) was $7,460 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,396 Mil.
Selling, General & Admin. Expense(SGA) was $2,041 Mil.
Total Current Liabilities was $4,878 Mil.
Long-Term Debt was $7,004 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)
=(2045 / 11148) / (3315 / 14922)
=0.18344098 / 0.22215521
=0.8257

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)
=(374 / 14922) / (368 / 11148)
=0.216794 / 0.19312881
=1.1225

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 - (6515 + 6394) / 16799) / (1 - (8927 + 7460) / 20727)
=0.2315614 / 0.20938872
=1.1059

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
=11148 / 14922
=0.7471

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))
=(1396 / (1396 + 7460)) / (1263 / (1263 + 6394))
=0.15763324 / 0.16494711
=0.9557

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)
=(1760 / 11148) / (2041 / 14922)
=0.15787585 / 0.13677791
=1.1542

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)
=((6020 + 4025) / 16799) / ((7004 + 4878) / 20727)
=0.59795226 / 0.57326193
=1.0431

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
=(-1252 - -310 - 967) / 16799
=-0.1136

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 -3.34 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.81591.05581.01581.11450.9070.96781.02580.85980.921
GMI 0.88821.01531.01281.30421.04191.011.1541.13830.8385
AQI 0.89220.93130.8741.00470.98690.95540.83690.82611.0213
SGI 1.51831.19051.22580.92011.15711.27071.17151.00320.9769
DEPI 0.91371.09531.1580.95590.87750.97221.00790.86760.9555
SGAI 0.92670.95581.05491.27350.95430.84310.9421.05031.0101
LVGI 1.16081.12251.15280.99511.04941.04421.11481.0420.9826
TATA -0.01750.01570.0202-0.0252-0.061-0.0264-0.0833-0.0636-0.068
M-score -2.42-2.23-2.25-2.45-2.72-2.40-2.70-2.94-2.97

Weatherford International PLC Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.97670.85980.99530.91250.86460.9210.75240.78620.8257
GMI 1.12521.13831.11061.02930.94660.83850.82540.93771.1225
AQI 0.97660.82610.92820.87390.87851.02130.93151.06381.1059
SGI 1.04821.00320.97160.9540.95760.97690.93920.86030.7471
DEPI 0.92930.86760.94380.8890.89650.95550.90510.9750.9557
SGAI 1.00841.04931.06421.08841.08361.01111.02821.09091.1542
LVGI 1.03961.0421.04471.02040.99490.98260.99431.00381.0431
TATA -0.0557-0.0636-0.0536-0.0632-0.066-0.068-0.0932-0.1068-0.1136
M-score -2.68-2.94-2.76-2.97-3.05-2.97-3.33-3.33-3.34
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