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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 -2.09.
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 * 1.2501||+||0.528 * 0.9946||+||0.404 * 1.0804||+||0.892 * 0.8223||+||0.115 * 1.0786|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0797||+||4.679 * -0.2351||-||0.327 * 1.4259|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $37.60 Mil.|
Revenue was 24.011 + 25.109 + 22.327 + 27.846 = $99.29 Mil.
Gross Profit was 6.763 + 3.528 + 1.301 + 9.737 = $21.33 Mil.
Total Current Assets was $104.85 Mil.
Total Assets was $209.15 Mil.
Property, Plant and Equipment(Net PPE) was $42.82 Mil.
Depreciation, Depletion and Amortization(DDA) was $13.22 Mil.
Selling, General & Admin. Expense(SGA) was $53.63 Mil.
Total Current Liabilities was $84.00 Mil.
Long-Term Debt was $45.63 Mil.
Net Income was -23.279 + -23.311 + -37.384 + -20.489 = $-104.46 Mil.
Non Operating Income was 2.003 + 4.905 + 3.571 + 3.529 = $14.01 Mil.
Cash Flow from Operations was -23.088 + -14.403 + -15.073 + -16.729 = $-69.29 Mil.
|Accounts Receivable was $36.58 Mil.
Revenue was 28.022 + 27.395 + 25.301 + 40.036 = $120.75 Mil.
Gross Profit was 5.424 + -1.196 + 7.969 + 13.601 = $25.80 Mil.
Total Current Assets was $159.58 Mil.
Total Assets was $291.23 Mil.
Property, Plant and Equipment(Net PPE) was $52.42 Mil.
Depreciation, Depletion and Amortization(DDA) was $17.88 Mil.
Selling, General & Admin. Expense(SGA) was $60.40 Mil.
Total Current Liabilities was $74.27 Mil.
Long-Term Debt was $52.33 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)|
|=||(37.599 / 99.293)||/||(36.578 / 120.754)|
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)|
|=||(3.528 / 120.754)||/||(6.763 / 99.293)|
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 - (104.848 + 42.82) / 209.145)||/||(1 - (159.582 + 52.418) / 291.234)|
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))|
|=||(17.882 / (17.882 + 52.418))||/||(13.215 / (13.215 + 42.82))|
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)|
|=||(53.625 / 99.293)||/||(60.404 / 120.754)|
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)|
|=||((45.628 + 84.002) / 209.145)||/||((52.329 + 74.265) / 291.234)|
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|
|=||(-104.463 - 14.008||-||-69.293)||/||209.145|
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 -3.62 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