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Westlake Chemical Corporation (NYSE:WLK)
Beneish M-Score
-2.36 (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.

Westlake Chemical Corporation has a M-score of -2.36 suggests that the company is not a manipulator.

WLK' s 10-Year Beneish M-Score Range
Min: -3.22   Max: -1.18
Current: -2.36

-3.22
-1.18

During the past 13 years, the highest Beneish M-Score of Westlake Chemical Corporation was -1.18. The lowest was -3.22. And the median was -2.46.


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 Westlake Chemical Corporation 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 * 1.017+0.528 * 0.7044+0.404 * 1.8051+0.892 * 1.0528+0.115 * 1.2432
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1558+4.679 * -0.036-0.327 * 0.8449
=-2.36

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $428 Mil.
Revenue was 951.625 + 1004.165 + 939.047 + 864.647 = $3,759 Mil.
Gross Profit was 295.671 + 304.471 + 273.487 + 227.809 = $1,101 Mil.
Total Current Assets was $1,649 Mil.
Total Assets was $4,061 Mil.
Property, Plant and Equipment(Net PPE) was $2,088 Mil.
Depreciation, Depletion and Amortization(DDA) was $158 Mil.
Selling, General & Admin. Expense(SGA) was $148 Mil.
Total Current Liabilities was $405 Mil.
Long-Term Debt was $764 Mil.
Net Income was 170.972 + 170.29 + 145.816 + 123.347 = $610 Mil.
Non Operating Income was 0.567 + -0.287 + -0.095 + 3.519 = $4 Mil.
Cash Flow from Operations was 205.229 + 292.02 + 139.228 + 116.252 = $753 Mil.
Accounts Receivable was $400 Mil.
Revenue was 801.041 + 821.175 + 913.958 + 1034.867 = $3,571 Mil.
Gross Profit was 190.248 + 172.179 + 201.896 + 172.637 = $737 Mil.
Total Current Assets was $1,751 Mil.
Total Assets was $3,412 Mil.
Property, Plant and Equipment(Net PPE) was $1,510 Mil.
Depreciation, Depletion and Amortization(DDA) was $145 Mil.
Selling, General & Admin. Expense(SGA) was $122 Mil.
Total Current Liabilities was $399 Mil.
Long-Term Debt was $764 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)
=(428.457 / 3759.484) / (400.159 / 3571.041)
=0.11396697 / 0.11205668
=1.017

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)
=(304.471 / 3571.041) / (295.671 / 3759.484)
=0.2063712 / 0.29297584
=0.7044

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 - (1649.082 + 2088.014) / 4060.909) / (1 - (1751.413 + 1510.048) / 3412.196)
=0.07973904 / 0.04417536
=1.8051

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
=3759.484 / 3571.041
=1.0528

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))
=(144.541 / (144.541 + 1510.048)) / (157.808 / (157.808 + 2088.014))
=0.08735765 / 0.07026737
=1.2432

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)
=(147.974 / 3759.484) / (121.609 / 3571.041)
=0.03936019 / 0.03405422
=1.1558

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)
=((763.879 + 404.858) / 4060.909) / ((763.761 + 398.51) / 3412.196)
=0.28780182 / 0.34062258
=0.8449

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
=(610.425 - 3.704 - 752.729) / 4060.909
=-0.036

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.

Westlake Chemical Corporation has a M-score of -2.36 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.

Westlake Chemical Corporation Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.93991.05121.00251.27850.59171.55320.7830.98370.99571.017
GMI 0.56120.84031.13871.87714.52550.22390.55130.98540.74830.7044
AQI 0.7260.81342.23231.82990.93010.84840.96690.81840.5181.8051
SGI 1.39521.22961.01771.28491.15670.62991.36381.14130.98651.0528
DEPI 1.02771.0141.16820.88910.98470.91410.94361.02831.10321.2432
SGAI 0.75731.03421.06770.9040.88451.41050.87050.94251.09861.1558
LVGI 0.650.91050.89371.32630.85211.03751.12350.93840.98550.8449
TATA -0.0108-0.0512-0.00880.0205-0.0963-0.0767-0.0212-0.0316-0.069-0.036
M-score -2.42-2.60-1.89-1.18-1.27-3.22-2.73-2.56-3.15-2.36

Westlake Chemical Corporation Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.07880.98370.93490.86620.83390.99571.02091.25431.10641.017
GMI 0.66920.98541.22031.18661.05640.74830.63940.6290.6230.7044
AQI 0.76420.81840.83590.5280.46610.5180.70751.84951.94521.8051
SGI 1.18281.14131.16151.12151.02060.98650.89790.90720.99441.0528
DEPI 1.0061.02831.03371.04681.06071.10321.17871.23161.29231.2432
SGAI 0.94020.94250.89490.92580.99651.09861.27321.30671.2651.1558
LVGI 1.03130.93840.9330.92170.930.98551.01130.9750.95950.8449
TATA 0.0001-0.0316-0.0492-0.0787-0.0854-0.069-0.0598-0.0253-0.0334-0.036
M-score -2.51-2.56-2.53-2.91-3.17-3.15-3.17-2.32-2.36-2.36
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