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Westlake Chemical Corp (NYSE:WLK)
Beneish M-Score
-2.56 (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 -2.56 suggests that the company is not a manipulator.

WLK' s 10-Year Beneish M-Score Range
Min: -3.22   Max: 4.16
Current: -2.56

-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 * 0.8974+0.528 * 0.7872+0.404 * 1.3926+0.892 * 1.1534+0.115 * 1.1217
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0347+4.679 * -0.0495-0.327 * 0.824
=-2.56

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $422 Mil.
Revenue was 1027.676 + 951.625 + 1004.165 + 939.047 = $3,923 Mil.
Gross Profit was 287.01 + 295.671 + 304.471 + 273.487 = $1,161 Mil.
Total Current Assets was $1,687 Mil.
Total Assets was $4,172 Mil.
Property, Plant and Equipment(Net PPE) was $2,151 Mil.
Depreciation, Depletion and Amortization(DDA) was $168 Mil.
Selling, General & Admin. Expense(SGA) was $153 Mil.
Total Current Liabilities was $360 Mil.
Long-Term Debt was $764 Mil.
Net Income was 158.032 + 170.972 + 170.29 + 145.816 = $645 Mil.
Non Operating Income was 2.509 + 0.567 + -0.287 + -0.095 = $3 Mil.
Cash Flow from Operations was 212.505 + 205.229 + 292.02 + 139.228 = $849 Mil.
Accounts Receivable was $408 Mil.
Revenue was 864.647 + 801.041 + 821.175 + 913.958 = $3,401 Mil.
Gross Profit was 227.809 + 190.248 + 172.179 + 201.896 = $792 Mil.
Total Current Assets was $1,725 Mil.
Total Assets was $3,559 Mil.
Property, Plant and Equipment(Net PPE) was $1,629 Mil.
Depreciation, Depletion and Amortization(DDA) was $145 Mil.
Selling, General & Admin. Expense(SGA) was $128 Mil.
Total Current Liabilities was $400 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)
=(421.879 / 3922.513) / (407.58 / 3400.821)
=0.10755324 / 0.11984753
=0.8974

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)
=(295.671 / 3400.821) / (287.01 / 3922.513)
=0.23292376 / 0.29589169
=0.7872

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 - (1687.263 + 2150.643) / 4171.956) / (1 - (1725.278 + 1629.309) / 3559.225)
=0.08007036 / 0.0574951
=1.3926

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
=3922.513 / 3400.821
=1.1534

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))
=(144.503 / (144.503 + 1629.309)) / (168.424 / (168.424 + 2150.643))
=0.08146466 / 0.07262576
=1.1217

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)
=(153.175 / 3922.513) / (128.351 / 3400.821)
=0.03905022 / 0.03774118
=1.0347

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)
=((763.909 + 359.934) / 4171.956) / ((763.79 + 399.815) / 3559.225)
=0.26938036 / 0.32692651
=0.824

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
=(645.11 - 2.694 - 848.982) / 4171.956
=-0.0495

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 -2.56 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 0.93991.05121.00251.27850.59171.55320.7830.98370.99571.017
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 Corp Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 0.98370.93490.86620.83390.99571.02091.25431.10641.0170.8974
GMI 0.98541.22031.18661.05640.74830.63940.6290.6230.70440.7872
AQI 0.81840.83590.5280.46610.5180.70751.84951.94521.80511.3926
SGI 1.14131.16151.12151.02060.98650.89790.90720.99441.05281.1534
DEPI 1.02831.03371.04681.06071.10321.17871.23161.29231.24321.1217
SGAI 0.94250.89490.92580.99651.09861.27321.30671.2651.15581.0347
LVGI 0.93840.9330.92170.930.98551.01130.9750.95950.84490.824
TATA -0.0316-0.0492-0.0787-0.0854-0.069-0.0598-0.0253-0.0334-0.036-0.0495
M-score -2.56-2.53-2.91-3.17-3.15-3.17-2.32-2.36-2.36-2.56
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