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Westlake Chemical Corp (NYSE:WLK)
Beneish M-Score
-2.89 (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 -2.89 suggests that the company is not a manipulator.

WLK' s Beneish M-Score Range Over the Past 10 Years
Min: -3.22   Max: 4.16
Current: -2.89

-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 -2.53.


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 * 0.9602+0.528 * 1.0977+0.404 * 0.8873+0.892 * 0.9652+0.115 * 0.991
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1039+4.679 * -0.0742-0.327 * 0.94
=-2.89

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $451 Mil.
Revenue was 975.187 + 986.766 + 1188.037 + 1185.002 = $4,335 Mil.
Gross Profit was 255.585 + 236.188 + 311.276 + 353.181 = $1,156 Mil.
Total Current Assets was $2,192 Mil.
Total Assets was $5,724 Mil.
Property, Plant and Equipment(Net PPE) was $3,115 Mil.
Depreciation, Depletion and Amortization(DDA) was $253 Mil.
Selling, General & Admin. Expense(SGA) was $223 Mil.
Total Current Liabilities was $506 Mil.
Long-Term Debt was $758 Mil.
Net Income was 123.128 + 110.969 + 183.604 + 205.095 = $623 Mil.
Non Operating Income was 2.645 + 4.48 + 1.005 + 22.058 = $30 Mil.
Cash Flow from Operations was 128.935 + 237.536 + 405.945 + 244.799 = $1,017 Mil.
Accounts Receivable was $487 Mil.
Revenue was 1103.531 + 1135.871 + 1253.227 + 998.576 = $4,491 Mil.
Gross Profit was 284.546 + 362.849 + 361.52 + 305.971 = $1,315 Mil.
Total Current Assets was $2,002 Mil.
Total Assets was $5,180 Mil.
Property, Plant and Equipment(Net PPE) was $2,751 Mil.
Depreciation, Depletion and Amortization(DDA) was $221 Mil.
Selling, General & Admin. Expense(SGA) was $210 Mil.
Total Current Liabilities was $453 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)
=(451.376 / 4334.992) / (487.003 / 4491.205)
=0.10412384 / 0.10843482
=0.9602

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)
=(1314.886 / 4491.205) / (1156.23 / 4334.992)
=0.29276909 / 0.26672022
=1.0977

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 - (2191.734 + 3114.821) / 5724.401) / (1 - (2002.162 + 2751.486) / 5179.785)
=0.07299384 / 0.08226924
=0.8873

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
=4334.992 / 4491.205
=0.9652

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))
=(221.155 / (221.155 + 2751.486)) / (252.83 / (252.83 + 3114.821))
=0.07439681 / 0.07507607
=0.991

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)
=(223.407 / 4334.992) / (209.67 / 4491.205)
=0.05153574 / 0.04668458
=1.1039

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)
=((758.3 + 506.161) / 5724.401) / ((764.027 + 453.207) / 5179.785)
=0.22088966 / 0.23499701
=0.94

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
=(622.796 - 30.188 - 1017.215) / 5724.401
=-0.0742

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 -2.89 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 -0.00880.0205-0.0947-0.0769-0.022-0.0325-0.0725-0.036-0.0673-0.0845
M-score -1.89-1.18-1.26-3.22-2.73-2.63-3.15-2.38-2.48-3.04

Westlake Chemical Corp Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.00210.93920.86191.21611.12271.05221.13140.80710.82550.9602
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 -0.036-0.0495-0.0614-0.0624-0.0671-0.0669-0.0653-0.073-0.0842-0.0742
M-score -2.38-2.52-2.83-2.36-2.48-2.59-2.53-3.04-3.04-2.89
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