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Westlake Chemical Corp (NYSE:WLK)
Beneish M-Score
-2.51 (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 -2.51 suggests that the company is not a manipulator.

WLK' s 10-Year Beneish M-Score Range
Min: -3.22   Max: -1.18
Current: -2.51

-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 -2.51.


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 * 1.094+0.528 * 0.982+0.404 * 1.0707+0.892 * 1.1745+0.115 * 0.9997
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1126+4.679 * -0.0673-0.327 * 0.8671
=-2.51

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $512 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.
Net Income was 183.291 + 167.757 + 169.443 + 158.032 = $679 Mil.
Non Operating Income was -7.161 + -2.67 + 4.601 + 2.509 = $-3 Mil.
Cash Flow from Operations was 256.252 + 343.882 + 219.737 + 212.505 = $1,032 Mil.
Accounts Receivable was $399 Mil.
Revenue was 951.625 + 1004.165 + 939.047 + 864.647 = $3,759 Mil.
Gross Profit was 295.671 + 304.471 + 273.487 + 227.809 = $1,101 Mil.
Total Current Assets was $1,649 Mil.
Total Assets was $4,061 Mil.
Property, Plant and Equipment(Net PPE) was $2,088 Mil.
Depreciation, Depletion and Amortization(DDA) was $158 Mil.
Selling, General & Admin. Expense(SGA) was $148 Mil.
Total Current Liabilities was $405 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)
=(512.078 / 4415.35) / (398.561 / 3759.484)
=0.11597676 / 0.10601481
=1.094

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)
=(361.52 / 3759.484) / (362.849 / 4415.35)
=0.29297584 / 0.29835687
=0.982

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 - (2011.287 + 2757.557) / 5213.99) / (1 - (1649.082 + 2088.014) / 4060.909)
=0.08537531 / 0.07973904
=1.0707

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
=4415.35 / 3759.484
=1.1745

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))
=(157.808 / (157.808 + 2088.014)) / (208.486 / (208.486 + 2757.557))
=0.07026737 / 0.07029096
=0.9997

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)
=(193.359 / 4415.35) / (147.974 / 3759.484)
=0.04379245 / 0.03936019
=1.1126

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)
=((763.997 + 537.18) / 5213.99) / ((763.879 + 404.858) / 4060.909)
=0.24955495 / 0.28780182
=0.8671

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
=(678.523 - -2.721 - 1032.376) / 5213.99
=-0.0673

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 -2.51 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 -0.0512-0.00880.0205-0.0963-0.0767-0.0212-0.0316-0.069-0.0367-0.0673
M-score -2.60-1.89-1.18-1.27-3.22-2.73-2.62-3.14-2.38-2.51

Westlake Chemical Corp Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.82761.00660.98421.19351.08751.00210.93920.86191.21611.094
GMI 1.05640.74830.63940.6290.6230.70440.78720.84140.93410.982
AQI 0.46610.5180.70751.84951.94521.80511.39260.87031.08341.0707
SGI 1.02060.98650.89790.90720.99441.05281.15341.16231.17241.1745
DEPI 1.06071.10321.17871.23161.29231.24321.12171.04281.09770.9997
SGAI 0.99651.09861.27321.30671.2651.15581.03470.9771.01351.1126
LVGI 0.930.98551.01130.9750.95950.84490.8240.84330.85520.8671
TATA -0.0854-0.069-0.0598-0.0253-0.0334-0.0367-0.0503-0.0621-0.0631-0.0673
M-score -3.18-3.14-3.20-2.37-2.38-2.38-2.52-2.83-2.37-2.51
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