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Williams Companies Inc (NYSE:WMB)
Beneish M-Score
-2.84 (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.

Williams Companies Inc has a M-score of -2.84 suggests that the company is not a manipulator.

WMB' s 10-Year Beneish M-Score Range
Min: -3.46   Max: -1.08
Current: -2.84

-3.46
-1.08

During the past 13 years, the highest Beneish M-Score of Williams Companies Inc was -1.08. The lowest was -3.46. And the median was -2.69.


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 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 * 1.069+0.528 * 0.9924+0.404 * 0.9367+0.892 * 0.9164+0.115 * 1.0878
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9785+4.679 * -0.0738-0.327 * 0.973
=-2.84

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $674 Mil.
Revenue was 1660 + 1623 + 1767 + 1810 = $6,860 Mil.
Gross Profit was 657 + 644 + 675 + 760 = $2,736 Mil.
Total Current Assets was $1,683 Mil.
Total Assets was $27,142 Mil.
Property, Plant and Equipment(Net PPE) was $18,210 Mil.
Depreciation, Depletion and Amortization(DDA) was $815 Mil.
Selling, General & Admin. Expense(SGA) was $512 Mil.
Total Current Liabilities was $1,983 Mil.
Long-Term Debt was $11,353 Mil.
Net Income was -14 + 141 + 142 + 161 = $430 Mil.
Non Operating Income was 59 + 48 + 79 + 29 = $215 Mil.
Cash Flow from Operations was 515 + 539 + 668 + 495 = $2,217 Mil.
Accounts Receivable was $688 Mil.
Revenue was 1869 + 1752 + 1846 + 2019 = $7,486 Mil.
Gross Profit was 740 + 720 + 671 + 832 = $2,963 Mil.
Total Current Assets was $1,924 Mil.
Total Assets was $24,327 Mil.
Property, Plant and Equipment(Net PPE) was $15,467 Mil.
Depreciation, Depletion and Amortization(DDA) was $756 Mil.
Selling, General & Admin. Expense(SGA) was $571 Mil.
Total Current Liabilities was $1,549 Mil.
Long-Term Debt was $10,735 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)
=(674 / 6860) / (688 / 7486)
=0.09825073 / 0.09190489
=1.069

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)
=(644 / 7486) / (657 / 6860)
=0.3958055 / 0.39883382
=0.9924

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 - (1683 + 18210) / 27142) / (1 - (1924 + 15467) / 24327)
=0.26707686 / 0.2851153
=0.9367

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
=6860 / 7486
=0.9164

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))
=(756 / (756 + 15467)) / (815 / (815 + 18210))
=0.04660051 / 0.04283837
=1.0878

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)
=(512 / 6860) / (571 / 7486)
=0.07463557 / 0.07627571
=0.9785

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)
=((11353 + 1983) / 27142) / ((10735 + 1549) / 24327)
=0.49134183 / 0.50495334
=0.973

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
=(430 - 215 - 2217) / 27142
=-0.0738

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 -2.84 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.

Williams Companies Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.17851.44520.63931.07750.6541.32951.30910.62071.14411.069
GMI 11113.81820.99450.6970.99670.95770.9924
AQI 1.05160.98620.77760.72941.04850.75890.77271.41422.320.9367
SGI 0.74840.78490.95071.12761.13390.69430.80411.19460.9440.9164
DEPI 1.24340.94320.94730.89820.97780.94151.02520.60922.50951.0878
SGAI 1.24951.13120.96961.07370.94371.93190.92720.79221.26810.9785
LVGI 0.83651.01660.88991.00310.88570.98591.05361.36020.82960.973
TATA -0.0465-0.0384-0.0633-0.0547-0.0817-0.0923-0.1329-0.18-0.0478-0.0738
M-score -2.70-2.48-3.21-2.69-1.51-3.14-3.25-3.46-1.93-2.84

Williams Companies Inc Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 2.51190.62070.55250.49240.41111.14411.31621.21061.03261.069
GMI 0.55090.99610.99771.01371.01660.95831.02141.05311.13790.9924
AQI 0.97531.41421.70622.52492.48622.321.84241.24041.25420.9367
SGI 0.5561.19461.3651.41461.46070.9440.90080.90650.91570.9164
DEPI 0.99380.60920.70910.88931.13822.50952.13271.75811.43891.0878
SGAI 0.89040.79560.8030.91071.01511.26281.33021.1971.13840.9785
LVGI 0.99091.36021.26491.15781.16830.82960.88130.97340.91840.973
TATA -0.0851-0.18-0.1427-0.1075-0.0964-0.0478-0.0571-0.0662-0.0694-0.0738
M-score -2.11-3.46-3.04-2.51-2.49-1.93-2.08-2.49-2.62-2.84
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