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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 -3.46. And the median was -2.48.
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 * 1.6107||+||0.528 * 0.9545||+||0.404 * 1.5119||+||0.892 * 1.0123||+||0.115 * 1.3146|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0905||+||4.679 * -0.0483||-||0.327 * 0.9754|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|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.
Net Income was 1678 + 103 + 140 + -14 = $1,907 Mil.
Non Operating Income was 2609 + 59 + -33 + 59 = $2,694 Mil.
Cash Flow from Operations was 345 + 313 + 446 + 515 = $1,619 Mil.
|Accounts Receivable was $590 Mil.
Revenue was 1623 + 1767 + 1810 + 1869 = $7,069 Mil.
Gross Profit was 644 + 675 + 760 + 1273 = $3,352 Mil.
Total Current Assets was $1,782 Mil.
Total Assets was $26,455 Mil.
Property, Plant and Equipment(Net PPE) was $17,467 Mil.
Depreciation, Depletion and Amortization(DDA) was $853 Mil.
Selling, General & Admin. Expense(SGA) was $529 Mil.
Total Current Liabilities was $2,086 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)|
|=||(962 / 7156)||/||(590 / 7069)|
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)|
|=||(954 / 7069)||/||(1262 / 7156)|
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 - (1898 + 27398) / 49807)||/||(1 - (1782 + 17467) / 26455)|
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))|
|=||(853 / (853 + 17467))||/||(1006 / (1006 + 27398))|
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)|
|=||(584 / 7156)||/||(529 / 7069)|
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)|
|=||((19922 + 2931) / 49807)||/||((10359 + 2086) / 26455)|
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|
|=||(1907 - 2694||-||1619)||/||49807|
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 -1.92 signals that the company is likely to 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