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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 -2.76 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 -2.84. 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 * 0.9953||+||0.528 * 1.1106||+||0.404 * 0.9282||+||0.892 * 0.9716||+||0.115 * 0.9438|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0652||+||4.679 * -0.0536||-||0.327 * 1.0447|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $3,723 Mil.|
Revenue was 3596 + 3738 + 3820 + 3868 = $15,022 Mil.
Gross Profit was 757 + 604 + 784 + 742 = $2,887 Mil.
Total Current Assets was $8,860 Mil.
Total Assets was $21,830 Mil.
Property, Plant and Equipment(Net PPE) was $8,213 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,407 Mil.
Selling, General & Admin. Expense(SGA) was $2,041 Mil.
Total Current Liabilities was $5,817 Mil.
Long-Term Debt was $7,039 Mil.
Net Income was -41 + -271 + 22 + -118 = $-408 Mil.
Non Operating Income was -9 + -16 + -30 + -18 = $-73 Mil.
Cash Flow from Operations was -406 + 662 + 326 + 252 = $834 Mil.
|Accounts Receivable was $3,850 Mil.
Revenue was 3837 + 4058 + 3819 + 3747 = $15,461 Mil.
Gross Profit was 831 + 841 + 852 + 776 = $3,300 Mil.
Total Current Assets was $9,057 Mil.
Total Assets was $22,681 Mil.
Property, Plant and Equipment(Net PPE) was $8,299 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,329 Mil.
Selling, General & Admin. Expense(SGA) was $1,972 Mil.
Total Current Liabilities was $5,754 Mil.
Long-Term Debt was $7,032 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)|
|=||(3723 / 15022)||/||(3850 / 15461)|
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)|
|=||(604 / 15461)||/||(757 / 15022)|
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 - (8860 + 8213) / 21830)||/||(1 - (9057 + 8299) / 22681)|
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))|
|=||(1329 / (1329 + 8299))||/||(1407 / (1407 + 8213))|
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)|
|=||(2041 / 15022)||/||(1972 / 15461)|
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)|
|=||((7039 + 5817) / 21830)||/||((7032 + 5754) / 22681)|
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|
|=||(-408 - -73||-||834)||/||21830|
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 -2.76 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