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Weatherford International PLC (NYSE:WFT)
Beneish M-Score
-2.76 (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 -2.97 suggests that the company is not a manipulator.

WFT' s 10-Year Beneish M-Score Range
Min: -2.84   Max: 4.03
Current: -2.76

-2.84
4.03

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.


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 * 0.9125+0.528 * 1.0293+0.404 * 0.8739+0.892 * 0.954+0.115 * 0.889
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0884+4.679 * -0.0632-0.327 * 1.0204
=-2.97

* 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 + 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.
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 + 3819 = $15,582 Mil.
Gross Profit was 742 + 831 + 841 + 852 = $3,266 Mil.
Total Current Assets was $8,948 Mil.
Total Assets was $22,632 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 $1,956 Mil.
Total Current Liabilities was $5,950 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 / 15582)
=0.22468887 / 0.24624567
=0.9125

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)
=(757 / 15582) / (882 / 14865)
=0.20960082 / 0.20363269
=1.0293

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 - (8948 + 8333) / 22632)
=0.20661991 / 0.23643514
=0.8739

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 / 15582
=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)
=(2031 / 14865) / (1956 / 15582)
=0.13662967 / 0.12552946
=1.0884

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 + 5950) / 22632)
=0.58781461 / 0.57604277
=1.0204

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 -2.97 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 1.09161.22680.81591.05581.01581.11450.9070.96781.02580.9222
GMI 0.95670.97390.88821.01531.01281.30421.04191.011.1541.1383
AQI 0.87941.03870.89220.93130.8741.00470.98690.95540.83690.9173
SGI 1.22241.38361.51831.19051.22580.92011.15711.27071.17151.0032
DEPI 0.98191.29690.91371.09531.1580.95590.87750.97221.00790.9324
SGAI 0.98510.89950.92670.95581.05491.27350.95430.84310.9421.0503
LVGI 0.86130.82311.16081.12251.15280.99511.04941.04421.11481.0373
TATA -0.0479-0.0194-0.01750.01570.0202-0.0252-0.061-0.0264-0.0833-0.0636
M-score -2.45-1.91-2.42-2.23-2.25-2.45-2.72-2.40-2.70-2.84

Weatherford International PLC Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.89960.94121.00911.02581.01760.9840.97670.92220.99530.9125
GMI 1.01911.07061.13021.1541.18741.14861.12521.13831.11061.0293
AQI 0.97270.87660.85030.83690.82360.93830.97660.91730.92820.8739
SGI 1.2771.26911.21851.17151.12661.08071.04821.00320.97160.954
DEPI 0.99250.99261.03191.00790.95880.94760.92930.93240.94380.889
SGAI 0.82530.87640.87420.9420.99280.99831.00841.04931.06421.0884
LVGI 1.03021.12121.11161.11481.13951.05011.03961.03731.04471.0204
TATA -0.0356-0.0716-0.0745-0.0833-0.0773-0.0503-0.0557-0.0636-0.0536-0.0632
M-score -2.47-2.66-2.63-2.70-2.73-2.63-2.68-2.84-2.76-2.97
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