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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.
During the past 13 years, the highest Beneish M-Score of Williams Companies Inc was 50.34. The lowest was -3.63. And the median was -2.55.
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 * 0.7047||+||0.528 * 1.0632||+||0.404 * 0.9594||+||0.892 * 1.0474||+||0.115 * 0.662|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2278||+||4.679 * -0.0543||-||0.327 * 1.1006|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $710 Mil.|
Revenue was 1799 + 1839 + 1716 + 2141 = $7,495 Mil.
Gross Profit was 970 + 1345 + 1254 + -67 = $3,502 Mil.
Total Current Assets was $1,264 Mil.
Total Assets was $50,819 Mil.
Property, Plant and Equipment(Net PPE) was $29,476 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,666 Mil.
Selling, General & Admin. Expense(SGA) was $751 Mil.
Total Current Liabilities was $3,858 Mil.
Long-Term Debt was $21,805 Mil.
Net Income was -40 + 114 + 70 + 193 = $337 Mil.
Non Operating Income was -331 + 136 + 67 + 127 = $-1 Mil.
Cash Flow from Operations was 603 + 814 + 669 + 1011 = $3,097 Mil.
|Accounts Receivable was $962 Mil.
Revenue was 2069 + 1678 + 1749 + 1660 = $7,156 Mil.
Gross Profit was 1262 + 954 + 682 + 657 = $3,555 Mil.
Total Current Assets was $1,898 Mil.
Total Assets was $49,807 Mil.
Property, Plant and Equipment(Net PPE) was $27,398 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,006 Mil.
Selling, General & Admin. Expense(SGA) was $584 Mil.
Total Current Liabilities was $2,931 Mil.
Long-Term Debt was $19,922 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)|
|=||(710 / 7495)||/||(962 / 7156)|
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)|
|=||(1345 / 7156)||/||(970 / 7495)|
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 - (1264 + 29476) / 50819)||/||(1 - (1898 + 27398) / 49807)|
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))|
|=||(1006 / (1006 + 27398))||/||(1666 / (1666 + 29476))|
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)|
|=||(751 / 7495)||/||(584 / 7156)|
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)|
|=||((21805 + 3858) / 50819)||/||((19922 + 2931) / 49807)|
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|
|=||(337 - -1||-||3097)||/||50819|
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 -3.06 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