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Westlake Chemical Corp (NYSE:WLK)
Beneish M-Score
-3.04 (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 -3.03 suggests that the company is not a manipulator.

WLK' s Beneish M-Score Range Over the Past 10 Years
Min: -3.22   Max: -1.18
Current: -3.04

-3.22
-1.18

During the past 13 years, the highest Beneish M-Score of Westlake Chemical Corp was -1.18. The lowest was -3.22. And the median was -2.55.


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 * 0.8255+0.528 * 1.1236+0.404 * 0.8319+0.892 * 1.0109+0.115 * 0.9295
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.153+4.679 * -0.0837-0.327 * 0.9248
=-3.03

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $439 Mil.
Revenue was 986.766 + 1188.037 + 1185.002 + 1103.531 = $4,463 Mil.
Gross Profit was 236.188 + 311.276 + 353.181 + 284.546 = $1,185 Mil.
Total Current Assets was $2,175 Mil.
Total Assets was $5,575 Mil.
Property, Plant and Equipment(Net PPE) was $3,004 Mil.
Depreciation, Depletion and Amortization(DDA) was $246 Mil.
Selling, General & Admin. Expense(SGA) was $225 Mil.
Total Current Liabilities was $523 Mil.
Long-Term Debt was $764 Mil.
Net Income was 110.969 + 183.604 + 205.095 + 146.342 = $646 Mil.
Non Operating Income was 1.829 + 1.005 + 22.058 + 9.096 = $34 Mil.
Cash Flow from Operations was 237.536 + 405.945 + 244.799 + 190.556 = $1,079 Mil.
Accounts Receivable was $526 Mil.
Revenue was 1135.871 + 1253.227 + 998.576 + 1027.676 = $4,415 Mil.
Gross Profit was 362.849 + 361.52 + 305.971 + 287.01 = $1,317 Mil.
Total Current Assets was $2,011 Mil.
Total Assets was $5,214 Mil.
Property, Plant and Equipment(Net PPE) was $2,758 Mil.
Depreciation, Depletion and Amortization(DDA) was $208 Mil.
Selling, General & Admin. Expense(SGA) was $193 Mil.
Total Current Liabilities was $537 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)
=(438.538 / 4463.336) / (525.546 / 4415.35)
=0.09825341 / 0.11902703
=0.8255

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)
=(311.276 / 4415.35) / (236.188 / 4463.336)
=0.29835687 / 0.26553927
=1.1236

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 - (2175.189 + 3004.067) / 5575.252) / (1 - (2011.287 + 2757.557) / 5213.99)
=0.07102746 / 0.08537531
=0.8319

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
=4463.336 / 4415.35
=1.0109

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))
=(208.486 / (208.486 + 2757.557)) / (245.757 / (245.757 + 3004.067))
=0.07029096 / 0.07562163
=0.9295

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)
=(225.364 / 4463.336) / (193.359 / 4415.35)
=0.05049228 / 0.04379245
=1.153

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)
=((764.115 + 522.642) / 5575.252) / ((763.997 + 537.18) / 5213.99)
=0.230798 / 0.24955495
=0.9248

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
=(646.01 - 33.988 - 1078.836) / 5575.252
=-0.0837

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 -3.03 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.00251.27850.59171.55320.7830.91861.00661.00211.12270.8255
GMI 1.13871.87714.52550.22390.55130.98540.74830.70440.9821.1236
AQI 2.23231.82990.93010.84840.96690.81840.5181.80511.07070.8319
SGI 1.01771.28491.15670.62991.36381.14130.98651.05281.17451.0109
DEPI 1.16820.88310.99140.91410.94361.02831.10321.24320.99970.9295
SGAI 1.06770.9040.88451.41050.87050.94251.09861.15581.11261.153
LVGI 0.89371.32630.85211.03751.12350.93840.98550.84490.86710.9248
TATA -0.00880.0205-0.0947-0.0769-0.022-0.0325-0.0725-0.036-0.0673-0.0834
M-score -1.89-1.18-1.26-3.22-2.73-2.63-3.15-2.38-2.48-3.03

Westlake Chemical Corp Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.00210.93920.86191.21611.12271.05221.13140.80710.82551.168
GMI 0.70440.78720.84140.93410.9821.01071.0291.03891.12361.0977
AQI 1.80511.39260.87031.08341.07071.02750.9530.71890.83190.8873
SGI 1.05281.15341.16231.17241.17451.1451.17471.09011.01090.9652
DEPI 1.24321.12171.04281.09770.99970.97620.97860.86010.92950.991
SGAI 1.15581.03470.9771.01351.11261.19551.26121.23811.1531.1039
LVGI 0.84490.8240.84330.85520.86710.87240.91120.90150.92480.94
TATA -0.036-0.0495-0.0614-0.0624-0.0671-0.0669-0.0653-0.073-0.0837-0.0737
M-score -2.38-2.52-2.83-2.36-2.48-2.59-2.53-3.04-3.03-2.69
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