Switch to:
Westlake Chemical Corp (NYSE:WLK)
Beneish M-Score
-1.22 (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 Corp has a M-score of -1.22 signals that the company is a manipulator.

WLK' s Beneish M-Score Range Over the Past 10 Years
Min: -3.22   Max: 4.16
Current: -1.22

-3.22
4.16

During the past 13 years, the highest Beneish M-Score of Westlake Chemical Corp was 4.16. The lowest was -3.22. And the median was -2.53.


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 Corp 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 * 1.9545+0.528 * 1.3159+0.404 * 2.8588+0.892 * 0.9381+0.115 * 1.7537
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.5027+4.679 * -0.0386-0.327 * 1.9066
=-1.22

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $908 Mil.
Revenue was 1279.028 + 1086.061 + 975.187 + 986.766 = $4,327 Mil.
Gross Profit was 202.133 + 241.366 + 255.585 + 236.188 = $935 Mil.
Total Current Assets was $2,420 Mil.
Total Assets was $10,897 Mil.
Property, Plant and Equipment(Net PPE) was $6,451 Mil.
Depreciation, Depletion and Amortization(DDA) was $293 Mil.
Selling, General & Admin. Expense(SGA) was $325 Mil.
Total Current Liabilities was $1,205 Mil.
Long-Term Debt was $3,681 Mil.
Net Income was 65.662 + 111.124 + 123.128 + 110.969 = $411 Mil.
Non Operating Income was 40.728 + 5.097 + 2.645 + 1.829 = $50 Mil.
Cash Flow from Operations was 174.268 + 240.957 + 128.935 + 237.536 = $782 Mil.
Accounts Receivable was $495 Mil.
Revenue was 1188.037 + 1185.002 + 1103.531 + 1135.871 = $4,612 Mil.
Gross Profit was 311.276 + 353.181 + 284.546 + 362.849 = $1,312 Mil.
Total Current Assets was $2,248 Mil.
Total Assets was $5,524 Mil.
Property, Plant and Equipment(Net PPE) was $2,917 Mil.
Depreciation, Depletion and Amortization(DDA) was $240 Mil.
Selling, General & Admin. Expense(SGA) was $231 Mil.
Total Current Liabilities was $535 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)
=(908.177 / 4327.042) / (495.318 / 4612.441)
=0.20988403 / 0.10738739
=1.9545

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)
=(1311.852 / 4612.441) / (935.272 / 4327.042)
=0.284416 / 0.21614581
=1.3159

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 - (2419.744 + 6450.947) / 10897.049) / (1 - (2248.43 + 2916.63) / 5524.405)
=0.18595475 / 0.06504682
=2.8588

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
=4327.042 / 4612.441
=0.9381

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))
=(240.321 / (240.321 + 2916.63)) / (292.721 / (292.721 + 6450.947))
=0.0761244 / 0.04340679
=1.7537

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)
=(325.35 / 4327.042) / (230.783 / 4612.441)
=0.07518993 / 0.05003489
=1.5027

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)
=((3680.585 + 1204.65) / 10897.049) / ((764.086 + 534.887) / 5524.405)
=0.44830807 / 0.23513356
=1.9066

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
=(410.883 - 50.299 - 781.696) / 10897.049
=-0.0386

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 Corp has a M-score of -1.22 signals that the company is likely to 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 local exchange's currency.

Westlake Chemical Corp Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.00251.27850.59171.55320.7830.91861.00661.00211.12270.7989
GMI 1.13871.87714.52550.22390.55130.98540.74830.70440.9821.1236
AQI 2.23231.82990.93010.84840.96690.81840.5181.80511.07070.8203
SGI 1.01771.28491.15670.62991.36381.14130.98651.05281.17451.0109
DEPI 1.16820.88910.98470.91410.94361.02831.10321.24320.99970.9295
SGAI 1.06770.9040.88451.41050.87050.94251.09861.15581.11261.153
LVGI 0.89371.32630.85211.03751.12350.93840.98550.84490.86710.9215
TATA -0.00880.0205-0.0963-0.0767-0.022-0.0314-0.0702-0.036-0.0667-0.0835
M-score -1.89-1.18-1.27-3.22-2.73-2.62-3.14-2.38-2.48-3.06

Westlake Chemical Corp Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 0.86191.21611.12271.05221.13140.80710.79890.96020.94611.9545
GMI 0.84140.93410.9821.01071.0291.03891.12361.09771.18111.3159
AQI 0.87031.08341.07071.02750.9530.71890.82030.88731.17392.8588
SGI 1.16231.17241.17451.1451.17471.09011.01090.96520.90560.9381
DEPI 1.04281.09770.99970.97620.97860.86010.92950.9911.01371.7537
SGAI 0.9771.01351.11261.19551.26121.23811.1531.10391.09811.5027
LVGI 0.84330.85520.86710.87240.91120.90150.92150.940.97011.9066
TATA -0.0614-0.0624-0.0671-0.0669-0.0651-0.0729-0.0837-0.0736-0.0836-0.0386
M-score -2.83-2.36-2.48-2.59-2.53-3.04-3.06-2.89-2.84-1.22
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
FEEDBACK