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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 Westport Innovations Inc was 229.10. The lowest was -10000000.00. And the median was -2.48.
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 Westport Innovations 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 * 0.9018||+||0.528 * 2.8854||+||0.404 * 0.7495||+||0.892 * 1.0561||+||0.115 * 0.751|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.7388||+||4.679 * -0.1345||-||0.327 * 1.0736|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $41.8 Mil.|
Revenue was 25.301 + 40.036 + 41.923 + 52.595 = $159.9 Mil.
Gross Profit was 7.969 + 13.601 + 12.272 + -17.067 = $16.8 Mil.
Total Current Assets was $229.0 Mil.
Total Assets was $392.5 Mil.
Property, Plant and Equipment(Net PPE) was $60.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.2 Mil.
Selling, General & Admin. Expense(SGA) was $65.8 Mil.
Total Current Liabilities was $74.5 Mil.
Long-Term Debt was $54.6 Mil.
Net Income was -25.476 + -35.358 + -23.866 + -89.451 = $-174.2 Mil.
Non Operating Income was 2.135 + 1.041 + -0.356 + -22.88 = $-20.1 Mil.
Cash Flow from Operations was -31.377 + -28.937 + -23.093 + -17.879 = $-101.3 Mil.
|Accounts Receivable was $43.9 Mil.
Revenue was 46.528 + 34.856 + 30.053 + 39.926 = $151.4 Mil.
Gross Profit was 16.057 + 8.257 + 8.095 + 13.423 = $45.8 Mil.
Total Current Assets was $201.8 Mil.
Total Assets was $420.0 Mil.
Property, Plant and Equipment(Net PPE) was $71.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $14.9 Mil.
Selling, General & Admin. Expense(SGA) was $84.3 Mil.
Total Current Liabilities was $76.9 Mil.
Long-Term Debt was $51.7 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)|
|=||(41.788 / 159.855)||/||(43.876 / 151.363)|
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)|
|=||(13.601 / 151.363)||/||(7.969 / 159.855)|
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 - (228.965 + 60.681) / 392.504)||/||(1 - (201.822 + 71.329) / 420.008)|
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))|
|=||(14.939 / (14.939 + 71.329))||/||(18.187 / (18.187 + 60.681))|
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)|
|=||(65.773 / 159.855)||/||(84.298 / 151.363)|
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)|
|=||((54.576 + 74.491) / 392.504)||/||((51.729 + 76.918) / 420.008)|
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|
|=||(-174.151 - -20.06||-||-101.286)||/||392.504|
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.
Westport Innovations Inc has a M-score of -2.26 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
Westport Innovations Inc Annual Data
Westport Innovations Inc Quarterly Data