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GuruFocus has detected 2 Warning Signs with Key Energy Services Inc $KEG.
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Key Energy Services Inc (NYSE:KEG)
Beneish M-Score
-4.33 (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.

Key Energy Services Inc has a M-score of -4.33 suggests that the company is not a manipulator.

KEG' s Beneish M-Score Range Over the Past 10 Years
Min: -17.58   Max: 28.52
Current: -4.33

-17.58
28.52

During the past 13 years, the highest Beneish M-Score of Key Energy Services Inc was 28.52. The lowest was -17.58. And the median was -2.74.


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 Key Energy Services 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 * 1.2085+0.528 * 0.7076+0.404 * 1.3649+0.892 * 0.6132+0.115 * 0.7054
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.3317+4.679 * -0.366-0.327 * 0.6482
=-4.33

* 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 $62.9 Mil.
Revenue was 101.452 + 90.917 + 102.406 + 95.012 = $389.8 Mil.
Gross Profit was 14.146 + 4.18 + 6.335 + 5.593 = $30.3 Mil.
Total Current Assets was $208.6 Mil.
Total Assets was $604.2 Mil.
Property, Plant and Equipment(Net PPE) was $384.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $116.8 Mil.
Selling, General & Admin. Expense(SGA) was $148.0 Mil.
Total Current Liabilities was $105.3 Mil.
Long-Term Debt was $244.6 Mil.
Net Income was -46.859 + 173.432 + -130.752 + -92.802 = $-97.0 Mil.
Non Operating Income was -1.298 + 247.313 + -0.258 + -0.546 = $245.2 Mil.
Cash Flow from Operations was -12.647 + -33.64 + -37.419 + -37.326 = $-121.0 Mil.
Accounts Receivable was $84.9 Mil.
Revenue was 111.088 + 150.174 + 176.857 + 197.496 = $635.6 Mil.
Gross Profit was 20.49 + -26.587 + 2.352 + 38.655 = $34.9 Mil.
Total Current Assets was $354.3 Mil.
Total Assets was $1,226.0 Mil.
Property, Plant and Equipment(Net PPE) was $854.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $168.3 Mil.
Selling, General & Admin. Expense(SGA) was $181.2 Mil.
Total Current Liabilities was $140.5 Mil.
Long-Term Debt was $954.7 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)
=(62.939 / 389.787) / (84.929 / 635.615)
=0.16147024 / 0.13361705
=1.2085

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)
=(34.91 / 635.615) / (30.254 / 389.787)
=0.05492318 / 0.07761675
=0.7076

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 - (208.599 + 384.066) / 604.246) / (1 - (354.254 + 854.576) / 1226.046)
=0.01916604 / 0.01404189
=1.3649

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
=389.787 / 635.615
=0.6132

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))
=(168.322 / (168.322 + 854.576)) / (116.845 / (116.845 + 384.066))
=0.16455404 / 0.23326499
=0.7054

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)
=(148.008 / 389.787) / (181.232 / 635.615)
=0.37971508 / 0.28512858
=1.3317

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)
=((244.623 + 105.277) / 604.246) / ((954.719 + 140.502) / 1226.046)
=0.57906879 / 0.89329519
=0.6482

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
=(-96.981 - 245.211 - -121.032) / 604.246
=-0.366

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.

Key Energy Services Inc has a M-score of -4.33 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.

Key Energy Services Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.17290.92611.11731.15250.89080.941.06270.9250.72191.2198
GMI 0.96681.1121.28310.95870.79891.1211.10821.16392.62721.0701
AQI 1.06390.81381.45020.98091.07630.86351.03911.01750.07321.3478
SGI 1.07491.18660.50911.05831.62731.13350.81210.89680.55510.5041
DEPI 1.23160.90160.79411.32191.07260.95790.91471.0130.82220.6947
SGAI 1.20210.94271.32941.00870.7370.91071.18471.25541.46221.5982
LVGI 0.98361.120.95360.87321.09281.02060.92211.09521.99330.655
TATA -0.0375-0.157-0.2282-0.036-0.019-0.1335-0.097-0.1471-0.6671-0.3661
M-score -2.42-3.17-3.61-2.41-2.16-3.03-2.99-3.31-6.19-4.28

Key Energy Services Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.9250.8070.74120.63130.72190.78430.93831.08471.21981.2085
GMI 1.16391.17941.17131.37562.62724.529669.102315.20641.07010.7076
AQI 1.01751.03570.99630.1130.07320.04880.07471.04881.34781.3649
SGI 0.89680.88130.81310.69490.55510.47470.44960.46010.50410.6132
DEPI 1.0131.00670.98660.94260.82220.85670.8780.92630.69470.7054
SGAI 1.25541.41951.49591.52431.46221.44381.48231.54371.59821.3317
LVGI 1.09521.12851.28381.81481.99332.06141.9771.4880.6550.6482
TATA -0.1471-0.1515-0.1254-0.5496-0.6671-0.7225-0.7733-0.3538-0.3661-0.366
M-score -3.31-3.48-3.56-6.19-6.19-5.4928.522.72-4.28-4.33
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