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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 -3.57. And the median was -2.47.
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 * 1.098||+||0.528 * 0.8666||+||0.404 * 1.5353||+||0.892 * 1.1184||+||0.115 * 0.913|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1927||+||4.679 * -0.0625||-||0.327 * 0.9199|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $808 Mil.|
Revenue was 1716 + 2141 + 2069 + 1678 = $7,604 Mil.
Gross Profit was 1254 + 1425 + 1262 + 954 = $4,895 Mil.
Total Current Assets was $1,622 Mil.
Total Assets was $50,457 Mil.
Property, Plant and Equipment(Net PPE) was $28,536 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,389 Mil.
Selling, General & Admin. Expense(SGA) was $707 Mil.
Total Current Liabilities was $2,330 Mil.
Long-Term Debt was $21,690 Mil.
Net Income was 70 + 193 + 1678 + 103 = $2,044 Mil.
Non Operating Income was 67 + 127 + 2609 + 59 = $2,862 Mil.
Cash Flow from Operations was 669 + 1011 + 345 + 313 = $2,338 Mil.
|Accounts Receivable was $658 Mil.
Revenue was 1749 + 1660 + 1623 + 1767 = $6,799 Mil.
Gross Profit was 980 + 934 + 913 + 966 = $3,793 Mil.
Total Current Assets was $2,178 Mil.
Total Assets was $28,306 Mil.
Property, Plant and Equipment(Net PPE) was $18,711 Mil.
Depreciation, Depletion and Amortization(DDA) was $828 Mil.
Selling, General & Admin. Expense(SGA) was $530 Mil.
Total Current Liabilities was $2,549 Mil.
Long-Term Debt was $12,099 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)|
|=||(808 / 7604)||/||(658 / 6799)|
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)|
|=||(1425 / 6799)||/||(1254 / 7604)|
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 - (1622 + 28536) / 50457)||/||(1 - (2178 + 18711) / 28306)|
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))|
|=||(828 / (828 + 18711))||/||(1389 / (1389 + 28536))|
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)|
|=||(707 / 7604)||/||(530 / 6799)|
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)|
|=||((21690 + 2330) / 50457)||/||((12099 + 2549) / 28306)|
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|
|=||(2044 - 2862||-||2338)||/||50457|
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 -2.45 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