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Westlake Chemical Corp (NYSE:WLK)
Beneish M-Score
-2.53 (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 -2.53 suggests that the company is not a manipulator.

WLK' s 10-Year Beneish M-Score Range
Min: -3.22   Max: 4.16
Current: -2.53

-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 -2.51.


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 * 1.1314+0.528 * 1.029+0.404 * 0.953+0.892 * 1.1747+0.115 * 0.9786
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.2612+4.679 * -0.0655-0.327 * 0.9112
=-2.53

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $576 Mil.
Revenue was 1185.002 + 1103.531 + 1135.871 + 1253.227 = $4,678 Mil.
Gross Profit was 353.181 + 284.546 + 362.849 + 361.52 = $1,362 Mil.
Total Current Assets was $2,166 Mil.
Total Assets was $5,411 Mil.
Property, Plant and Equipment(Net PPE) was $2,856 Mil.
Depreciation, Depletion and Amortization(DDA) was $233 Mil.
Selling, General & Admin. Expense(SGA) was $228 Mil.
Total Current Liabilities was $535 Mil.
Long-Term Debt was $764 Mil.
Net Income was 205.095 + 146.342 + 183.291 + 167.757 = $702 Mil.
Non Operating Income was 22.058 + 9.096 + -7.161 + -2.67 = $21 Mil.
Cash Flow from Operations was 244.799 + 190.556 + 256.252 + 343.882 = $1,035 Mil.
Accounts Receivable was $433 Mil.
Revenue was 998.576 + 1027.676 + 951.625 + 1004.165 = $3,982 Mil.
Gross Profit was 305.971 + 287.01 + 295.671 + 304.471 = $1,193 Mil.
Total Current Assets was $1,823 Mil.
Total Assets was $4,369 Mil.
Property, Plant and Equipment(Net PPE) was $2,217 Mil.
Depreciation, Depletion and Amortization(DDA) was $177 Mil.
Selling, General & Admin. Expense(SGA) was $154 Mil.
Total Current Liabilities was $387 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)
=(575.609 / 4677.631) / (433.104 / 3982.042)
=0.12305567 / 0.1087643
=1.1314

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)
=(284.546 / 3982.042) / (353.181 / 4677.631)
=0.29962592 / 0.29119356
=1.029

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 - (2166.24 + 2855.508) / 5411.01) / (1 - (1822.503 + 2217.049) / 4369.369)
=0.07193888 / 0.0754839
=0.953

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
=4677.631 / 3982.042
=1.1747

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))
=(176.716 / (176.716 + 2217.049)) / (232.993 / (232.993 + 2855.508))
=0.07382345 / 0.07543886
=0.9786

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)
=(228.294 / 4677.631) / (154.098 / 3982.042)
=0.04880547 / 0.03869824
=1.2612

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)
=((764.056 + 534.658) / 5411.01) / ((763.938 + 386.929) / 4369.369)
=0.24001323 / 0.26339433
=0.9112

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
=(702.485 - 21.323 - 1035.489) / 5411.01
=-0.0655

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 -2.53 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.05121.00251.27850.59171.55320.7830.91861.00661.00211.094
GMI 0.84031.13871.87714.52550.22390.55130.98540.74830.70440.982
AQI 0.81342.23231.82990.93010.84840.96690.81840.5181.80511.0707
SGI 1.22961.01771.28491.15670.62991.36381.14130.98651.05281.1745
DEPI 1.0141.16820.88910.98470.91410.94361.02831.10321.24320.9997
SGAI 1.03421.06770.9040.88451.41050.87050.94251.09861.15581.1126
LVGI 0.91050.89371.32630.85211.03751.12350.93840.98550.84490.8671
TATA -0.0512-0.00880.0205-0.0963-0.0769-0.022-0.0325-0.0721-0.036-0.0673
M-score -2.60-1.89-1.18-1.27-3.22-2.73-2.63-3.15-2.38-2.51

Westlake Chemical Corp Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 0.98421.19351.08751.00210.93920.86191.21611.0941.05221.1314
GMI 0.63940.6290.6230.70440.78720.84140.93410.9821.01071.029
AQI 0.70751.84951.94521.80511.39260.87031.08341.07071.02750.953
SGI 0.89790.90720.99441.05281.15341.16231.17241.17451.1451.1747
DEPI 1.17871.23161.29231.24321.12171.04281.09770.99970.97620.9786
SGAI 1.27321.30671.2651.15581.03470.9771.01351.11261.19551.2612
LVGI 1.01130.9750.95950.84490.8240.84330.85520.86710.87240.9112
TATA -0.0615-0.0264-0.0341-0.036-0.0495-0.0614-0.0625-0.0673-0.0671-0.0655
M-score -3.21-2.38-2.38-2.38-2.52-2.83-2.36-2.51-2.59-2.53
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