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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 -2.76 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 * 0.9953+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
=-2.76

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

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

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)
=(3723 / 15022) / (3850 / 15461)
=0.24783651 / 0.24901365
=0.9953

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)
=(604 / 15461) / (757 / 15022)
=0.21344027 / 0.1921848
=1.1106

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 - (8860 + 8213) / 21830) / (1 - (9057 + 8299) / 22681)
=0.21791113 / 0.23477801
=0.9282

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
=15022 / 15461
=0.9716

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))
=0.1380349 / 0.1462578
=0.9438

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)
=0.13586739 / 0.12754673
=1.0652

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)
=0.58891434 / 0.56373176
=1.0447

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
=(-408 - -73 - 834) / 21830
=-0.0536

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.


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

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 0.96780.89960.94121.00911.02581.01760.9840.97670.92220.9953
GMI 1.011.01911.07061.13021.1541.18741.14861.12521.13831.1106
AQI 0.95540.97270.87660.85030.83690.82360.93830.97660.91730.9282
SGI 1.27071.2771.26911.21851.17151.12661.08071.04821.00320.9716
DEPI 0.97220.99250.99261.03191.00790.95880.94760.92930.93240.9438
SGAI 0.84310.82530.87640.87420.9420.99280.99931.00941.05031.0652
LVGI 1.04421.03021.12121.11161.11481.13951.05011.03961.03731.0447
TATA -0.0264-0.0356-0.0716-0.0745-0.0833-0.0773-0.0503-0.0557-0.0636-0.0536
M-score -2.40-2.47-2.66-2.63-2.70-2.73-2.63-2.69-2.84-2.76
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