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Westlake Chemical Corp (NYSE:WLK)
Beneish M-Score
-3.48 (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 -3.48 suggests that the company is not a manipulator.

WLK' s 10-Year Beneish M-Score Range
Min: -3.88   Max: 4.06
Current: -3.48

-3.88
4.06

During the past 13 years, the highest Beneish M-Score of Westlake Chemical Corp was 4.06. The lowest was -3.88. And the median was -2.62.


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 * 0.7834+0.528 * 0.8414+0.404 * 0.8703+0.892 * 1.1623+0.115 * 1.0835
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.977+4.679 * -0.1874-0.327 * 0.8433
=-3.48

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
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 $293 Mil.
Selling, General & Admin. Expense(SGA) was $154 Mil.
Total Current Liabilities was $387 Mil.
Long-Term Debt was $764 Mil.
Net Income was 169.443 + 158.032 + 170.972 + 170.29 = $669 Mil.
Non Operating Income was 4.601 + 2.509 + 3.653 + -0.287 = $10 Mil.
Cash Flow from Operations was 219.737 + 212.505 + 752.729 + 292.02 = $1,477 Mil.
Accounts Receivable was $476 Mil.
Revenue was 939.047 + 864.647 + 801.041 + 821.175 = $3,426 Mil.
Gross Profit was 273.487 + 227.809 + 190.248 + 172.179 = $864 Mil.
Total Current Assets was $1,601 Mil.
Total Assets was $3,708 Mil.
Property, Plant and Equipment(Net PPE) was $1,786 Mil.
Depreciation, Depletion and Amortization(DDA) was $259 Mil.
Selling, General & Admin. Expense(SGA) was $136 Mil.
Total Current Liabilities was $394 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)
=(433.104 / 3982.042) / (475.638 / 3425.91)
=0.1087643 / 0.13883552
=0.7834

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)
=(287.01 / 3425.91) / (305.971 / 3982.042)
=0.25211491 / 0.29962592
=0.8414

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 - (1822.503 + 2217.049) / 4369.369) / (1 - (1601.123 + 1785.574) / 3708.335)
=0.0754839 / 0.0867338
=0.8703

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
=3982.042 / 3425.91
=1.1623

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))
=(258.531 / (258.531 + 1785.574)) / (293.01 / (293.01 + 2217.049))
=0.12647638 / 0.11673431
=1.0835

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)
=(154.098 / 3982.042) / (135.693 / 3425.91)
=0.03869824 / 0.03960787
=0.977

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)
=((763.938 + 386.929) / 4369.369) / ((763.82 + 394.456) / 3708.335)
=0.26339433 / 0.31234395
=0.8433

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
=(668.737 - 10.476 - 1476.991) / 4369.369
=-0.1874

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 -3.48 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 -0.0108-0.0512-0.00880.0205-0.0963-0.0772-0.0212-0.0334-0.0737-0.0367
M-score -2.42-2.60-1.89-1.18-1.27-3.23-2.73-2.57-3.17-2.37

Westlake Chemical Corp Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.93490.86620.77361.06621.02091.25431.08751.0170.85990.7834
GMI 1.22031.18661.05640.74830.63940.6290.6230.70440.78720.8414
AQI 0.83590.5280.46610.5180.70751.84951.94521.80511.39260.8703
SGI 1.16151.12151.02060.98650.89790.90720.99441.05281.15341.1623
DEPI 0.85121.27741.29340.81540.86430.74970.78831.24141.1541.0835
SGAI 0.89490.92580.99651.09861.27321.30671.2651.15581.03470.977
LVGI 0.9330.92170.930.98551.01130.9750.95950.84490.8240.8433
TATA -0.0628-0.0806-0.0872-0.22-0.2033-0.1625-0.1631-0.1715-0.1815-0.1874
M-score -2.62-2.89-3.21-3.82-3.88-3.02-3.04-3.00-3.21-3.48
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