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Weatherford International PLC (NYSE:WFT)
Beneish M-Score
-3.33 (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 -3.33 suggests that the company is not a manipulator.

WFT' s 10-Year Beneish M-Score Range
Min: -3.33   Max: 4.03
Current: -3.33

-3.33
4.03

During the past 13 years, the highest Beneish M-Score of Weatherford International PLC was 4.03. The lowest was -3.33. And the median was -2.41.


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 * 0.7862+0.528 * 0.9377+0.404 * 1.0638+0.892 * 0.8603+0.115 * 0.975
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0909+4.679 * -0.1068-0.327 * 1.0038
=-3.33

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $2,259 Mil.
Revenue was 2390 + 2794 + 3727 + 3877 = $12,788 Mil.
Gross Profit was 374 + 592 + 819 + 992 = $2,777 Mil.
Total Current Assets was $7,064 Mil.
Total Assets was $17,634 Mil.
Property, Plant and Equipment(Net PPE) was $6,694 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,292 Mil.
Selling, General & Admin. Expense(SGA) was $1,906 Mil.
Total Current Liabilities was $4,137 Mil.
Long-Term Debt was $6,268 Mil.
Net Income was -489 + -118 + -475 + 77 = $-1,005 Mil.
Non Operating Income was -34 + -37 + -225 + -9 = $-305 Mil.
Cash Flow from Operations was 291 + -42 + 584 + 350 = $1,183 Mil.
Accounts Receivable was $3,340 Mil.
Revenue was 3711 + 3596 + 3738 + 3820 = $14,865 Mil.
Gross Profit was 882 + 757 + 604 + 784 = $3,027 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 $2,031 Mil.
Total Current Liabilities was $5,801 Mil.
Long-Term Debt was $7,021 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)
=(2259 / 12788) / (3340 / 14865)
=0.17664998 / 0.22468887
=0.7862

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)
=(592 / 14865) / (374 / 12788)
=0.20363269 / 0.21715671
=0.9377

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 - (7064 + 6694) / 17634) / (1 - (9718 + 7588) / 21813)
=0.21980265 / 0.20661991
=1.0638

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
=12788 / 14865
=0.8603

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))
=(1421 / (1421 + 7588)) / (1292 / (1292 + 6694))
=0.15773116 / 0.16178312
=0.975

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)
=(1906 / 12788) / (2031 / 14865)
=0.14904598 / 0.13662967
=1.0909

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)
=((6268 + 4137) / 17634) / ((7021 + 5801) / 21813)
=0.59005331 / 0.58781461
=1.0038

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
=(-1005 - -305 - 1183) / 17634
=-0.1068

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 -3.33 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.22680.81591.05581.01581.11450.9070.96781.02580.85980.921
GMI 0.97390.88821.01531.01281.30421.04191.011.1541.13830.8385
AQI 1.03870.89220.93130.8741.00470.98690.95540.83690.82611.0213
SGI 1.38361.51831.19051.22580.92011.15711.27071.17151.00320.9769
DEPI 1.29690.91371.09531.1580.95590.87750.97221.00790.86760.9555
SGAI 0.89950.92670.95581.05491.27350.95430.84310.9421.05031.0101
LVGI 0.82311.16081.12251.15280.99511.04941.04421.11481.0420.9826
TATA -0.0194-0.01750.01570.0202-0.0252-0.061-0.0264-0.0833-0.0636-0.068
M-score -1.91-2.42-2.23-2.25-2.45-2.72-2.40-2.70-2.94-2.97

Weatherford International PLC Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 1.01760.9840.97670.85980.99530.91250.86460.9210.75240.7862
GMI 1.18741.14861.12521.13831.11061.02930.94660.83850.82540.9377
AQI 0.82360.93830.97660.82610.92820.87390.87851.02130.93151.0638
SGI 1.12661.08071.04821.00320.97160.9540.95760.97690.93920.8603
DEPI 0.95880.94760.92930.86760.94380.8890.89650.95550.90510.975
SGAI 0.99280.99831.00841.04931.06421.08841.08361.01111.02821.0909
LVGI 1.13951.05011.03961.0421.04471.02040.99490.98260.99431.0038
TATA -0.0773-0.0503-0.0557-0.0636-0.0536-0.0632-0.066-0.068-0.0932-0.1068
M-score -2.73-2.63-2.68-2.94-2.76-2.97-3.05-2.97-3.33-3.33
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