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GuruFocus has detected 3 Warning Signs with TechnipFMC PLC $FTI.
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TechnipFMC PLC (NYSE:FTI)
Beneish M-Score
-1.98 (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.

TechnipFMC PLC has a M-score of -2.00 signals that the company is a manipulator.

FTI' s Beneish M-Score Range Over the Past 10 Years
Min: -3.47   Max: 1.65
Current: -1.98

-3.47
1.65

During the past 13 years, the highest Beneish M-Score of TechnipFMC PLC was 1.65. The lowest was -3.47. And the median was -2.58.


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 TechnipFMC 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 * 1.2582+0.528 * 0.977+0.404 * 1.2401+0.892 * 1.0652+0.115 * 1.3801
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9525+4.679 * -0.0063-0.327 * 0.7769
=-2.00

* 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 (Dec15) TTM:
Accounts Receivable was $2,435.36 Mil.
Revenue was 3390.8631016 + 3276.54320988 + 3160.56179775 + 2363.80066815 = $12,191.77 Mil.
Gross Profit was 405.142245989 + 476.543209877 + 465.730337079 + 393.033407572 = $1,740.45 Mil.
Total Current Assets was $13,746.40 Mil.
Total Assets was $29,595.48 Mil.
Property, Plant and Equipment(Net PPE) was $3,978.86 Mil.
Depreciation, Depletion and Amortization(DDA) was $379.22 Mil.
Selling, General & Admin. Expense(SGA) was $692.67 Mil.
Total Current Liabilities was $11,506.71 Mil.
Long-Term Debt was $3,085.40 Mil.
Net Income was 190.961497326 + 206.84624018 + 138.539325843 + 144.832962138 = $681.18 Mil.
Non Operating Income was 337.084491979 + 4.60157126824 + 0 + 11.4966592428 = $353.18 Mil.
Cash Flow from Operations was 151.127272727 + -223.232323232 + 429.178651685 + 157.606904232 = $514.68 Mil.
Accounts Receivable was $1,817.21 Mil.
Revenue was 1358.71459695 + 3489.22558923 + 3477.44107744 + 3120.45454545 = $11,445.84 Mil.
Gross Profit was 420.806100218 + 512.682379349 + 299.214365881 + 363.636363636 = $1,596.34 Mil.
Total Current Assets was $7,269.28 Mil.
Total Assets was $14,889.98 Mil.
Property, Plant and Equipment(Net PPE) was $2,804.90 Mil.
Depreciation, Depletion and Amortization(DDA) was $382.80 Mil.
Selling, General & Admin. Expense(SGA) was $682.75 Mil.
Total Current Liabilities was $7,678.10 Mil.
Long-Term Debt was $1,771.24 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)
=(2435.35614973 / 12191.7687774) / (1817.21132898 / 11445.8358091)
=0.19975413 / 0.15876615
=1.2582

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)
=(1596.33920908 / 11445.8358091) / (1740.44920052 / 12191.7687774)
=0.13946899 / 0.14275609
=0.977

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 - (13746.4042781 + 3978.85882353) / 29595.484492) / (1 - (7269.28104575 + 2804.90196078) / 14889.9782135)
=0.40108218 / 0.32342527
=1.2401

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
=12191.7687774 / 11445.8358091
=1.0652

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))
=(382.804232804 / (382.804232804 + 2804.90196078)) / (379.215523691 / (379.215523691 + 3978.85882353))
=0.12008768 / 0.08701447
=1.3801

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)
=(692.668149926 / 12191.7687774) / (682.747644512 / 11445.8358091)
=0.05681441 / 0.05965031
=0.9525

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)
=((3085.40427807 + 11506.7144385) / 29595.484492) / ((1771.24183007 + 7678.10457516) / 14889.9782135)
=0.4930522 / 0.63461116
=0.7769

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
=(681.180025487 - 353.18272249 - 514.680505412) / 29595.484492
=-0.0063

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.

TechnipFMC PLC has a M-score of -2.00 signals that the company is likely to 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.

TechnipFMC PLC Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1.02971.86850.95371.39891.29990.67930.82611.30280.85520.9452
GMI 0.99261.28590.53390.86130.90791.03170.99851.05461.2311.0418
AQI 0.92340.99050.99540.97440.92591.10031.12320.85241.0421.0045
SGI 1.43581.25460.88070.93090.85481.11431.2011.12581.02490.9066
DEPI 0.96971.0480.99821.05321.75511.22470.88120.98440.83260.859
SGAI 0.89250.87161.22621.19511.20770.95911.08460.98260.79340.9347
LVGI 0.94381.0470.95550.99071.00780.99030.92311.04471.01110.993
TATA -0.0923-0.0867-0.0042-0.05470.0371-0.01220.0086-0.04540.0264-0.0384
M-score -2.50-1.70-2.92-2.54-2.19-2.64-2.37-2.35-2.32-2.77

TechnipFMC PLC Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Mar17
DSRI 10.77691110.9941111.2582
GMI 1.17631.2351.13261.27131.21451.04180.95280.72430.72660.977
AQI 0.84031.0421.30131.43911.41741.00451.06451.0421.0191.2401
SGI 1.11711.12811.03130.99550.9520.8620.82330.80360.79641.0652
DEPI 0.80250.77140.74330.74170.73970.89190.95871.19181.27751.3801
SGAI 0.85370.79120.80.79080.83180.93381.02431.07311.0680.9525
LVGI 1.0591.01111.0791.08941.03260.9930.98090.96120.97540.7769
TATA -0.04490.0265-0.0146-0.0130.0023-0.0361-0.006-0.01180.0021-0.0063
M-score -2.57-2.30-2.35-2.25-2.24-2.75-2.67-2.82-2.76-2.00
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