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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.
Williams Companies Inc has a M-score of -2.59 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Williams Companies Inc was -1.19. The lowest was -3.63. And the median was -2.70.
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 Williams Companies Inc 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 * 1.0113||+||0.528 * 1.0112||+||0.404 * 1.382||+||0.892 * 0.9322||+||0.115 * 1.0893|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0629||+||4.679 * -0.0451||-||0.327 * 1.0343|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $658 Mil.|
Revenue was 1678 + 1749 + 1660 + 1623 = $6,710 Mil.
Gross Profit was 954 + 682 + 657 + 644 = $2,937 Mil.
Total Current Assets was $2,119 Mil.
Total Assets was $34,949 Mil.
Property, Plant and Equipment(Net PPE) was $19,442 Mil.
Depreciation, Depletion and Amortization(DDA) was $844 Mil.
Selling, General & Admin. Expense(SGA) was $543 Mil.
Total Current Liabilities was $2,396 Mil.
Long-Term Debt was $15,539 Mil.
Net Income was 103 + 140 + -14 + 141 = $370 Mil.
Non Operating Income was 59 + -33 + 59 + 48 = $133 Mil.
Cash Flow from Operations was 313 + 446 + 515 + 539 = $1,813 Mil.
|Accounts Receivable was $698 Mil.
Revenue was 1767 + 1810 + 1869 + 1752 = $7,198 Mil.
Gross Profit was 966 + 760 + 740 + 720 = $3,186 Mil.
Total Current Assets was $1,946 Mil.
Total Assets was $25,657 Mil.
Property, Plant and Equipment(Net PPE) was $16,599 Mil.
Depreciation, Depletion and Amortization(DDA) was $788 Mil.
Selling, General & Admin. Expense(SGA) was $548 Mil.
Total Current Liabilities was $2,371 Mil.
Long-Term Debt was $10,359 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(658 / 6710)||/||(698 / 7198)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(682 / 7198)||/||(954 / 6710)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (2119 + 19442) / 34949)||/||(1 - (1946 + 16599) / 25657)|
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.
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))|
|=||(788 / (788 + 16599))||/||(844 / (844 + 19442))|
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)|
|=||(543 / 6710)||/||(548 / 7198)|
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)|
|=||((15539 + 2396) / 34949)||/||((10359 + 2371) / 25657)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(370 - 133||-||1813)||/||34949|
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.
Williams Companies Inc has a M-score of -2.59 suggests that the company will not be a manipulator.
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
Williams Companies Inc Annual Data
Williams Companies Inc Quarterly Data