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Weatherford International PLC (NYSE:WFT)
Beneish M-Score
-3.05 (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 -3.05 suggests that the company is not a manipulator.

WFT' s 10-Year Beneish M-Score Range
Min: -3.05   Max: 4.03
Current: -3.05

-3.05
4.03

During the past 13 years, the highest Beneish M-Score of Weatherford International PLC was 4.03. The lowest was -3.05. 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 * 0.8646+0.528 * 0.9466+0.404 * 0.8785+0.892 * 0.9576+0.115 * 0.8965
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0836+4.679 * -0.066-0.327 * 0.9949
=-3.05

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $3,315 Mil.
Revenue was 3877 + 3711 + 3596 + 3738 = $14,922 Mil.
Gross Profit was 992 + 882 + 757 + 604 = $3,235 Mil.
Total Current Assets was $8,927 Mil.
Total Assets was $20,727 Mil.
Property, Plant and Equipment(Net PPE) was $7,460 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,396 Mil.
Selling, General & Admin. Expense(SGA) was $2,041 Mil.
Total Current Liabilities was $4,878 Mil.
Long-Term Debt was $7,004 Mil.
Net Income was 77 + -145 + -41 + -271 = $-380 Mil.
Non Operating Income was -9 + -19 + -9 + -16 = $-53 Mil.
Cash Flow from Operations was 350 + 435 + -406 + 662 = $1,041 Mil.
Accounts Receivable was $4,004 Mil.
Revenue was 3820 + 3868 + 3837 + 4058 = $15,583 Mil.
Gross Profit was 784 + 742 + 831 + 841 = $3,198 Mil.
Total Current Assets was $9,073 Mil.
Total Assets was $22,937 Mil.
Property, Plant and Equipment(Net PPE) was $8,397 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,382 Mil.
Selling, General & Admin. Expense(SGA) was $1,967 Mil.
Total Current Liabilities was $6,151 Mil.
Long-Term Debt was $7,065 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)
=(3315 / 14922) / (4004 / 15583)
=0.22215521 / 0.25694667
=0.8646

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)
=(882 / 15583) / (992 / 14922)
=0.20522364 / 0.216794
=0.9466

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 - (8927 + 7460) / 20727) / (1 - (9073 + 8397) / 22937)
=0.20938872 / 0.23834852
=0.8785

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
=14922 / 15583
=0.9576

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))
=(1382 / (1382 + 8397)) / (1396 / (1396 + 7460))
=0.14132324 / 0.15763324
=0.8965

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 / 14922) / (1967 / 15583)
=0.13677791 / 0.1262273
=1.0836

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)
=((7004 + 4878) / 20727) / ((7065 + 6151) / 22937)
=0.57326193 / 0.57618695
=0.9949

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
=(-380 - -53 - 1041) / 20727
=-0.066

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 -3.05 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

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.94121.00911.02581.01760.9840.97670.92220.99530.91250.8646
GMI 1.07061.13021.1541.18741.14861.12521.13831.11061.02930.9466
AQI 0.87660.85030.83690.82360.93830.97660.91730.92820.87390.8785
SGI 1.26911.21851.17151.12661.08071.04821.00320.97160.9540.9576
DEPI 0.99261.03191.00790.95880.94760.92930.93240.94380.8890.8965
SGAI 0.87640.87420.9420.99280.99831.00841.04931.06421.08841.0836
LVGI 1.12121.11161.11481.13951.05011.03961.03731.04471.02040.9949
TATA -0.0716-0.0745-0.0833-0.0773-0.0503-0.0557-0.0636-0.0536-0.0632-0.066
M-score -2.66-2.63-2.70-2.73-2.63-2.68-2.84-2.76-2.97-3.05
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