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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 -3.87. And the median was -2.44.
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 * 0.9408||+||0.528 * 0.3858||+||0.404 * 1.2345||+||0.892 * 0.8209||+||0.115 * 0.8013|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0663||+||4.679 * -0.169||-||0.327 * 1.54|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $40.5 Mil.|
Revenue was 27.395 + 25.301 + 40.036 + 41.923 = $134.7 Mil.
Gross Profit was -1.196 + 7.969 + 13.601 + 12.272 = $32.6 Mil.
Total Current Assets was $190.9 Mil.
Total Assets was $337.7 Mil.
Property, Plant and Equipment(Net PPE) was $58.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $18.7 Mil.
Selling, General & Admin. Expense(SGA) was $65.8 Mil.
Total Current Liabilities was $86.3 Mil.
Long-Term Debt was $59.6 Mil.
Net Income was -64.92 + -25.476 + -35.358 + -23.866 = $-149.6 Mil.
Non Operating Income was 11.402 + 2.135 + 1.041 + -0.356 = $14.2 Mil.
Cash Flow from Operations was -23.35 + -31.377 + -28.937 + -23.093 = $-106.8 Mil.
|Accounts Receivable was $52.4 Mil.
Revenue was 52.595 + 46.528 + 34.856 + 30.053 = $164.0 Mil.
Gross Profit was -17.067 + 16.057 + 8.257 + 8.095 = $15.3 Mil.
Total Current Assets was $319.7 Mil.
Total Assets was $491.7 Mil.
Property, Plant and Equipment(Net PPE) was $67.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $16.3 Mil.
Selling, General & Admin. Expense(SGA) was $75.2 Mil.
Total Current Liabilities was $125.0 Mil.
Long-Term Debt was $13.0 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)|
|=||(40.505 / 134.655)||/||(52.445 / 164.032)|
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)|
|=||(7.969 / 164.032)||/||(-1.196 / 134.655)|
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 - (190.875 + 58.134) / 337.695)||/||(1 - (319.726 + 67.349) / 491.671)|
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))|
|=||(16.288 / (16.288 + 67.349))||/||(18.666 / (18.666 + 58.134))|
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)|
|=||(65.809 / 134.655)||/||(75.182 / 164.032)|
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)|
|=||((59.587 + 86.333) / 337.695)||/||((12.988 + 124.967) / 491.671)|
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|
|=||(-149.62 - 14.222||-||-106.757)||/||337.695|
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 -3.93 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