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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 -1.00. The lowest was -3.45. And the median was -2.45.
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 * 0.9484||+||0.528 * 0.7578||+||0.404 * 0.9001||+||0.892 * 0.9637||+||0.115 * 0.7243|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1632||+||4.679 * -0.048||-||0.327 * 1.1599|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $1,041 Mil.|
Revenue was 2006 + 1799 + 1839 + 1716 = $7,360 Mil.
Gross Profit was 1181 + 970 + 1345 + 1254 = $4,750 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.
Net Income was -715 + -40 + 114 + 70 = $-571 Mil.
Non Operating Income was -767 + -331 + 136 + 67 = $-895 Mil.
Cash Flow from Operations was 592 + 603 + 814 + 669 = $2,678 Mil.
|Accounts Receivable was $1,139 Mil.
Revenue was 2141 + 2069 + 1678 + 1749 = $7,637 Mil.
Gross Profit was 951 + 850 + 954 + 980 = $3,735 Mil.
Total Current Assets was $1,890 Mil.
Total Assets was $50,455 Mil.
Property, Plant and Equipment(Net PPE) was $28,081 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,176 Mil.
Selling, General & Admin. Expense(SGA) was $661 Mil.
Total Current Liabilities was $2,567 Mil.
Long-Term Debt was $20,780 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)|
|=||(1041 / 7360)||/||(1139 / 7637)|
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)|
|=||(970 / 7637)||/||(1181 / 7360)|
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 - (1527 + 29579) / 49020)||/||(1 - (1890 + 28081) / 50455)|
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))|
|=||(1176 / (1176 + 28081))||/||(1738 / (1738 + 29579))|
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)|
|=||(741 / 7360)||/||(661 / 7637)|
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)|
|=||((23812 + 2497) / 49020)||/||((20780 + 2567) / 50455)|
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|
|=||(-571 - -895||-||2678)||/||49020|
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 -3.06 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