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Westlake Chemical Corp (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 Corp 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: 4.16
Current: -2.36

-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 -2.45.


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 * 1.2161+0.528 * 0.9341+0.404 * 1.0834+0.892 * 1.1724+0.115 * 1.0977
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0135+4.679 * -0.0625-0.327 * 0.8552
=-2.36

* 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 $563 Mil.
Revenue was 1253.227 + 998.576 + 1027.676 + 951.625 = $4,231 Mil.
Gross Profit was 361.52 + 305.971 + 287.01 + 295.671 = $1,250 Mil.
Total Current Assets was $1,952 Mil.
Total Assets was $5,126 Mil.
Property, Plant and Equipment(Net PPE) was $2,710 Mil.
Depreciation, Depletion and Amortization(DDA) was $190 Mil.
Selling, General & Admin. Expense(SGA) was $171 Mil.
Total Current Liabilities was $573 Mil.
Long-Term Debt was $764 Mil.
Net Income was 167.757 + 169.443 + 158.032 + 170.972 = $666 Mil.
Non Operating Income was -2.67 + 4.601 + 2.509 + 0.567 = $5 Mil.
Cash Flow from Operations was 343.882 + 219.737 + 212.505 + 205.229 = $981 Mil.
Accounts Receivable was $395 Mil.
Revenue was 1004.165 + 939.047 + 864.647 + 801.041 = $3,609 Mil.
Gross Profit was 304.471 + 273.487 + 227.809 + 190.248 = $996 Mil.
Total Current Assets was $1,643 Mil.
Total Assets was $3,923 Mil.
Property, Plant and Equipment(Net PPE) was $1,953 Mil.
Depreciation, Depletion and Amortization(DDA) was $151 Mil.
Selling, General & Admin. Expense(SGA) was $144 Mil.
Total Current Liabilities was $433 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)
=(562.963 / 4231.104) / (394.846 / 3608.9)
=0.13305345 / 0.10940896
=1.2161

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)
=(305.971 / 3608.9) / (361.52 / 4231.104)
=0.27598853 / 0.29547182
=0.9341

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 - (1951.948 + 2710.475) / 5126.283) / (1 - (1642.851 + 1952.918) / 3923.449)
=0.09048662 / 0.08351835
=1.0834

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
=4231.104 / 3608.9
=1.1724

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))
=(151.234 / (151.234 + 1952.918)) / (189.908 / (189.908 + 2710.475))
=0.07187409 / 0.06547687
=1.0977

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)
=(170.988 / 4231.104) / (143.9 / 3608.9)
=0.04041215 / 0.03987365
=1.0135

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)
=((763.968 + 573.036) / 5126.283) / ((763.849 + 432.686) / 3923.449)
=0.26081354 / 0.30497019
=0.8552

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
=(666.204 - 5.007 - 981.353) / 5126.283
=-0.0625

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 -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 Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.93991.05121.00251.27850.59171.55320.7830.91861.00661.0021
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 -0.0108-0.0512-0.00880.0205-0.0963-0.0769-0.022-0.0325-0.0721-0.036
M-score -2.42-2.60-1.89-1.18-1.27-3.22-2.73-2.63-3.15-2.38

Westlake Chemical Corp Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.82740.82761.00660.98421.19351.08751.00210.93920.86191.2161
GMI 1.18661.05640.74830.63940.6290.6230.70440.78720.84140.9341
AQI 0.5280.46610.5180.70751.84951.94521.80511.39260.87031.0834
SGI 1.12151.02060.98650.89790.90720.99441.05281.15341.16231.1724
DEPI 1.04681.06071.10321.17871.23161.29231.24321.12171.04281.0977
SGAI 0.92580.99651.09861.27321.30671.2651.15581.03470.9771.0135
LVGI 0.92170.930.98551.01130.9750.95950.84490.8240.84330.8552
TATA -0.0814-0.0884-0.0721-0.0615-0.0264-0.0341-0.036-0.0495-0.0614-0.0625
M-score -2.96-3.19-3.15-3.21-2.38-2.38-2.38-2.52-2.83-2.36
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