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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 50.44. The lowest was -3.45. And the median was -2.54.
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 * 1.2338||+||0.528 * 0.8739||+||0.404 * 0.9312||+||0.892 * 0.9749||+||0.115 * 0.9044|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0244||+||4.679 * -0.0706||-||0.327 * 1.1054|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $854 Mil.|
Revenue was 1905 + 1736 + 1660 + 2006 = $7,307 Mil.
Gross Profit was 1050 + 941 + 951 + 1181 = $4,123 Mil.
Total Current Assets was $1,627 Mil.
Total Assets was $47,288 Mil.
Property, Plant and Equipment(Net PPE) was $28,263 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,777 Mil.
Selling, General & Admin. Expense(SGA) was $750 Mil.
Total Current Liabilities was $2,465 Mil.
Long-Term Debt was $23,932 Mil.
Net Income was 61 + -405 + -65 + -715 = $-1,124 Mil.
Non Operating Income was 152 + 136 + 18 + -767 = $-461 Mil.
Cash Flow from Operations was 618 + 685 + 779 + 592 = $2,674 Mil.
|Accounts Receivable was $710 Mil.
Revenue was 1799 + 1839 + 1716 + 2141 = $7,495 Mil.
Gross Profit was 970 + 908 + 867 + 951 = $3,696 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.
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)|
|=||(854 / 7307)||/||(710 / 7495)|
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)|
|=||(3696 / 7495)||/||(4123 / 7307)|
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 - (1627 + 28263) / 47288)||/||(1 - (1264 + 29476) / 50819)|
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))|
|=||(1666 / (1666 + 29476))||/||(1777 / (1777 + 28263))|
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)|
|=||(750 / 7307)||/||(751 / 7495)|
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)|
|=||((23932 + 2465) / 47288)||/||((21805 + 3858) / 50819)|
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|
|=||(-1124 - -461||-||2674)||/||47288|
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 -2.76 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