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GuruFocus has detected 4 Warning Signs with Williams Companies Inc $WMB.
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Williams Companies Inc (NYSE:WMB)
Beneish M-Score
-3.02 (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 -3.02 suggests that the company is not a manipulator.

WMB' s Beneish M-Score Range Over the Past 10 Years
Min: -3.45   Max: -1
Current: -3.02

-3.45
-1

During the past 13 years, the highest Beneish M-Score of Williams Companies Inc was -1.00. The lowest was -3.45. And the median was -2.55.


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 * 0.8844+0.528 * 0.9538+0.404 * 0.99+0.892 * 1.0189+0.115 * 0.9504
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9576+4.679 * -0.0895-0.327 * 1.0174
=-3.02

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $938 Mil.
Revenue was 2198 + 1905 + 1736 + 1660 = $7,499 Mil.
Gross Profit was 1252 + 1050 + 941 + 951 = $4,194 Mil.
Total Current Assets was $1,462 Mil.
Total Assets was $46,835 Mil.
Property, Plant and Equipment(Net PPE) was $28,428 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,763 Mil.
Selling, General & Admin. Expense(SGA) was $723 Mil.
Total Current Liabilities was $2,949 Mil.
Long-Term Debt was $22,624 Mil.
Net Income was -15 + 61 + -405 + -65 = $-424 Mil.
Non Operating Income was -202 + 152 + 136 + 18 = $104 Mil.
Cash Flow from Operations was 1582 + 618 + 685 + 779 = $3,664 Mil.
Accounts Receivable was $1,041 Mil.
Revenue was 2006 + 1799 + 1839 + 1716 = $7,360 Mil.
Gross Profit was 1181 + 970 + 908 + 867 = $3,926 Mil.
Total Current Assets was $1,527 Mil.
Total Assets was $49,020 Mil.
Property, Plant and Equipment(Net PPE) was $29,579 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,738 Mil.
Selling, General & Admin. Expense(SGA) was $741 Mil.
Total Current Liabilities was $2,497 Mil.
Long-Term Debt was $23,812 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)
=(938 / 7499) / (1041 / 7360)
=0.12508334 / 0.14144022
=0.8844

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)
=(3926 / 7360) / (4194 / 7499)
=0.53342391 / 0.55927457
=0.9538

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 - (1462 + 28428) / 46835) / (1 - (1527 + 29579) / 49020)
=0.36180207 / 0.36544268
=0.99

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
=7499 / 7360
=1.0189

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))
=(1738 / (1738 + 29579)) / (1763 / (1763 + 28428))
=0.05549701 / 0.05839489
=0.9504

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)
=(723 / 7499) / (741 / 7360)
=0.09641286 / 0.10067935
=0.9576

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)
=((22624 + 2949) / 46835) / ((23812 + 2497) / 49020)
=0.54602327 / 0.53669931
=1.0174

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
=(-424 - 104 - 3664) / 46835
=-0.0895

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 -3.02 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 local exchange's currency.

Williams Companies Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.07750.67552.01340.48431.07291.14411.0691.5180.94840.8844
GMI 13.81820.88270.78530.99670.95770.99240.97340.76810.9538
AQI 0.72941.04850.75893.80580.28712.320.93671.52010.90010.99
SGI 1.12761.13390.44391.25771.19460.9440.91641.11330.96371.0189
DEPI 0.89820.97780.94150.62511.02752.44011.08781.06580.72430.9504
SGAI 1.07370.94372.2080.81120.79221.26810.97851.15971.16320.9576
LVGI 1.00310.88570.98591.05361.36020.82960.9730.94181.15991.0174
TATA -0.0605-0.0817-0.092-0.1329-0.18-0.0478-0.0738-0.0548-0.048-0.0895
M-score -2.71-1.49-2.84-2.35-3.45-1.93-2.84-1.96-3.06-3.02

Williams Companies Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.61071.5181.0980.98630.70470.94840.95221.05971.23380.8844
GMI 1.30510.7380.83250.86860.74270.91680.86760.82020.87390.9538
AQI 1.51191.52011.53531.05350.95940.90010.90260.9020.93120.99
SGI 1.01231.11331.11841.15721.04740.96370.96050.92740.97491.0189
DEPI 1.26161.06580.9130.79660.6620.72430.83470.88390.90440.9504
SGAI 1.06641.15971.19271.18561.22781.16321.1281.08561.02440.9576
LVGI 0.97540.94180.91990.95421.10061.15991.14011.1521.10541.0174
TATA -0.0483-0.0548-0.0625-0.0728-0.0543-0.048-0.0522-0.0611-0.0706-0.0895
M-score -1.74-2.09-2.47-2.78-3.23-2.98-3.00-2.99-2.76-3.02
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