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GuruFocus has detected 1 Warning Sign with Ensco PLC $ESV.
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Ensco PLC (NYSE:ESV)
Beneish M-Score
-3.14 (As of Today)

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.

Ensco PLC has a M-score of -3.14 suggests that the company is not a manipulator.

ESV' s Beneish M-Score Range Over the Past 10 Years
Min: -4.66   Max: 0.02
Current: -3.14

-4.66
0.02

During the past 13 years, the highest Beneish M-Score of Ensco PLC was 0.02. The lowest was -4.66. And the median was -2.57.


Definition

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 Ensco PLC 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 * 0.8817+0.528 * 1.0752+0.404 * 0.7071+0.892 * 0.6553+0.115 * 1.2283
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.4126+4.679 * -0.0387-0.327 * 0.8172
=-3.14

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $323 Mil.
Revenue was 471.1 + 504.6 + 548.2 + 909.6 = $2,434 Mil.
Gross Profit was 193 + 215.6 + 250.1 + 559.4 = $1,218 Mil.
Total Current Assets was $2,714 Mil.
Total Assets was $13,972 Mil.
Property, Plant and Equipment(Net PPE) was $11,121 Mil.
Depreciation, Depletion and Amortization(DDA) was $443 Mil.
Selling, General & Admin. Expense(SGA) was $103 Mil.
Total Current Liabilities was $546 Mil.
Long-Term Debt was $4,906 Mil.
Net Income was -25.7 + 39 + 85.3 + 590.6 = $689 Mil.
Non Operating Income was -6.3 + 4.9 + 18.7 + 261.4 = $279 Mil.
Cash Flow from Operations was 104.6 + 83.5 + 194.4 + 568.5 = $951 Mil.
Accounts Receivable was $559 Mil.
Revenue was 814 + 828.3 + 1012.2 + 1059 = $3,714 Mil.
Gross Profit was 450.3 + 413.1 + 578.7 + 556.4 = $1,999 Mil.
Total Current Assets was $2,323 Mil.
Total Assets was $13,610 Mil.
Property, Plant and Equipment(Net PPE) was $11,097 Mil.
Depreciation, Depletion and Amortization(DDA) was $548 Mil.
Selling, General & Admin. Expense(SGA) was $112 Mil.
Total Current Liabilities was $1,507 Mil.
Long-Term Debt was $4,991 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(322.7 / 2433.5) / (558.5 / 3713.5)
=0.13260736 / 0.1503972
=0.8817

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(1998.5 / 3713.5) / (1218.1 / 2433.5)
=0.53817154 / 0.50055476
=1.0752

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (2713.6 + 11120.7) / 13972.3) / (1 - (2322.8 + 11097.1) / 13610)
=0.00987668 / 0.01396767
=0.7071

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=2433.5 / 3713.5
=0.6553

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))
=(547.7 / (547.7 + 11097.1)) / (442.8 / (442.8 + 11120.7))
=0.04703387 / 0.0382929
=1.2283

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)
=(103.4 / 2433.5) / (111.7 / 3713.5)
=0.04249024 / 0.03007944
=1.4126

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)
=((4905.9 + 546.1) / 13972.3) / ((4991 + 1507.4) / 13610)
=0.39020061 / 0.47747245
=0.8172

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(689.2 - 278.7 - 951) / 13972.3
=-0.0387

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.

Ensco PLC has a M-score of -3.14 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

Ensco PLC Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.95841.09520.84850.75182.23950.77780.85011.01440.76060.8816
GMI 1.00330.99231.06391.15421.15530.87881.01110.99541.00941.016
AQI 1.08390.98930.95580.87592.64710.93880.93560.20590.45530.701
SGI 1.18011.15010.79260.87941.67111.30061.21831.02970.89020.6833
DEPI 1.06461.01191.14071.02761.58250.95390.9560.76930.83811.253
SGAI 1.13040.78621.50091.52991.10230.72180.80930.87261.00831.246
LVGI 10.75290.91320.75964.15310.89860.94981.47111.12060.8261
TATA -0.0580.0014-0.0733-0.0363-0.0085-0.0424-0.0223-0.3714-0.2396-0.0329
M-score -2.61-2.14-3.17-2.96-1.02-2.63-2.50-4.66-4.19-3.09

Ensco PLC Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.01440.94250.79860.87160.76060.89720.76990.69020.88160.8817
GMI 0.99540.97870.971511.00941.03110.99021.02311.0161.0752
AQI 0.20590.18650.16330.16610.45530.40260.42540.42820.7010.7071
SGI 1.02971.07171.05230.99990.89020.79660.77750.70540.68330.6553
DEPI 0.76930.75010.91060.88150.83810.86960.87560.99311.2531.2283
SGAI 0.87260.78590.75940.83941.00831.13171.19851.29351.2461.4126
LVGI 1.47111.4891.32581.14641.12061.10660.95730.94930.82610.8172
TATA -0.3714-0.3626-0.2682-0.2646-0.2396-0.2355-0.2386-0.2446-0.0329-0.0387
M-score -4.66-4.66-4.30-4.21-4.19-4.16-4.28-4.43-3.09-3.14
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