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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 406566.91. The lowest was -10000000.00. And the median was -2.52.
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 * 1.2886||+||0.528 * 0.6956||+||0.404 * 1.1973||+||0.892 * 0.6137||+||0.115 * 0.8286|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.3421||+||4.679 * -0.207||-||0.327 * 1.4504|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $42.4 Mil.|
Revenue was 27.846 + 28.022 + 27.395 + 25.301 = $108.6 Mil.
Gross Profit was 9.737 + 5.424 + -1.196 + 7.969 = $21.9 Mil.
Total Current Assets was $150.9 Mil.
Total Assets was $277.8 Mil.
Property, Plant and Equipment(Net PPE) was $47.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $16.8 Mil.
Selling, General & Admin. Expense(SGA) was $57.3 Mil.
Total Current Liabilities was $78.9 Mil.
Long-Term Debt was $52.4 Mil.
Net Income was -20.489 + -17.204 + -64.92 + -25.476 = $-128.1 Mil.
Non Operating Income was 3.529 + 6.312 + 11.402 + 2.135 = $23.4 Mil.
Cash Flow from Operations was -16.729 + -22.512 + -23.35 + -31.377 = $-94.0 Mil.
|Accounts Receivable was $53.6 Mil.
Revenue was 37.862 + 39.928 + 52.595 + 46.528 = $176.9 Mil.
Gross Profit was 13.601 + 12.272 + -17.067 + 16.057 = $24.9 Mil.
Total Current Assets was $274.5 Mil.
Total Assets was $445.0 Mil.
Property, Plant and Equipment(Net PPE) was $64.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.8 Mil.
Selling, General & Admin. Expense(SGA) was $69.6 Mil.
Total Current Liabilities was $86.9 Mil.
Long-Term Debt was $58.1 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)|
|=||(42.408 / 108.564)||/||(53.629 / 176.913)|
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)|
|=||(5.424 / 176.913)||/||(9.737 / 108.564)|
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 - (150.919 + 47.771) / 277.755)||/||(1 - (274.477 + 64.714) / 444.983)|
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))|
|=||(17.817 / (17.817 + 64.714))||/||(16.832 / (16.832 + 47.771))|
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)|
|=||(57.307 / 108.564)||/||(69.582 / 176.913)|
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)|
|=||((52.389 + 78.865) / 277.755)||/||((58.123 + 86.86) / 444.983)|
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|
|=||(-128.089 - 23.378||-||-93.968)||/||277.755|
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 -3.83 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