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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.
Weatherford International PLC has a M-score of -3.02 suggests that the company is not a manipulator.
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.
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|
|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
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)|
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)|
|=||(3194 / 15581)||/||(882 / 14865)|
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 - (9718 + 7588) / 21813)||/||(1 - (7769 + 8333) / 21175)|
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))|
|=||(1359 / (1359 + 8333))||/||(1421 / (1421 + 7588))|
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)|
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)|
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|
|=||(-435 - -74||-||1017)||/||21813|
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.
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
Weatherford International PLC Annual Data
Weatherford International PLC Quarterly Data