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GuruFocus has detected 3 Warning Signs with Penn West Petroleum Ltd $PWE.
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Penn West Petroleum Ltd (NYSE:PWE)
Beneish M-Score
-2.89 (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.

Penn West Petroleum Ltd has a M-score of -2.92 suggests that the company is not a manipulator.

PWE' s Beneish M-Score Range Over the Past 10 Years
Min: -5.1   Max: -1.33
Current: -2.89

-5.1
-1.33

During the past 13 years, the highest Beneish M-Score of Penn West Petroleum Ltd was -1.33. The lowest was -5.10. And the median was -2.91.


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 Penn West Petroleum Ltd 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 * 1.6549+0.528 * 0.9434+0.404 * 0+0.892 * 0.45+0.115 * 2.3507
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.3589+4.679 * -0.0831-0.327 * 0.4552
=-2.92

* 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 $75.4 Mil.
Revenue was 118.024949578 + 72.7190943849 + 109.093683247 + 122.537614394 = $422.4 Mil.
Gross Profit was 69.4703817136 + 23.9898043332 + 57.2169667379 + 51.1865984179 = $201.9 Mil.
Total Current Assets was $154.6 Mil.
Total Assets was $2,350.0 Mil.
Property, Plant and Equipment(Net PPE) was $2,195.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $357.9 Mil.
Selling, General & Admin. Expense(SGA) was $47.2 Mil.
Total Current Liabilities was $145.7 Mil.
Long-Term Debt was $276.4 Mil.
Net Income was 20.1688204975 + -173.926081415 + -176.991150442 + -102.373196836 = $-433.1 Mil.
Non Operating Income was 27.6387540151 + -100.457305645 + -78.5779676533 + 36.4510625097 = $-114.9 Mil.
Cash Flow from Operations was 28.3857473668 + -32.9859809581 + -74.7635032042 + -43.431053203 = $-122.8 Mil.
Accounts Receivable was $101.3 Mil.
Revenue was 150.461212763 + 220.958214833 + 284.185134931 + 283.05701577 = $938.7 Mil.
Gross Profit was 65.0234386814 + 99.9051994458 + 140.208050656 + 118.075212293 = $423.2 Mil.
Total Current Assets was $397.7 Mil.
Total Assets was $4,244.7 Mil.
Property, Plant and Equipment(Net PPE) was $3,738.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,837.1 Mil.
Selling, General & Admin. Expense(SGA) was $77.2 Mil.
Total Current Liabilities was $477.8 Mil.
Long-Term Debt was $1,196.9 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)
=(75.4463285277 / 422.375341604) / (101.315590504 / 938.661578297)
=0.17862389 / 0.10793623
=1.6549

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)
=(423.211901076 / 938.661578297) / (201.863751202 / 422.375341604)
=0.4508674 / 0.47792504
=0.9434

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 - (154.627623814 + 2195.41346082) / 2350.04108463) / (1 - (397.701497051 + 3738.84772418) / 4244.6695902)
=-0 / 0.02547203
=0

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
=422.375341604 / 938.661578297
=0.45

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))
=(1837.14150224 / (1837.14150224 + 3738.84772418)) / (357.862409742 / (357.862409742 + 2195.41346082))
=0.32947365 / 0.14015815
=2.3507

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)
=(47.1800741904 / 422.375341604) / (77.1576277832 / 938.661578297)
=0.11170177 / 0.08219962
=1.3589

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)
=((276.387540151 + 145.663703593) / 2350.04108463) / ((1196.88492364 + 477.846665659) / 4244.6695902)
=0.17959313 / 0.39454934
=0.4552

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
=(-433.121608196 - -114.945456774 - -122.794789998) / 2350.04108463
=-0.0831

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.

Penn West Petroleum Ltd has a M-score of -2.92 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.

Penn West Petroleum Ltd Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.88090.6441.9270.90161.03410.81060.90420.76221.51551.7121
GMI 1.01940.90121.53610.85780.93631.0661.08570.85821.20911.0292
AQI 0.95641.69521.11071.27580.8381.01341.10360.60120.37260.1229
SGI 1.34711.75450.5841.20621.19920.95540.74910.83130.46950.4406
DEPI 0.78870.95080.94111.24861.1010.72220.80161.04910.47321.6927
SGAI 1.17681.11172.13181.57320.42281.18571.38640.82661.22751.619
LVGI 1.3851.08980.92480.86031.14760.85011.0291.09071.38780.5949
TATA -0.1074-0.0804-0.1229-0.013-0.0423-0.0948-0.1296-0.1153-0.3135-0.1375
M-score -2.97-2.34-2.42-2.44-2.51-3.11-3.41-3.62-4.32-3.20

Penn West Petroleum Ltd Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.75320.750.99140.97531.48471.39811.29211.3661.78441.6549
GMI 0.85870.90831.05651.14921.21141.1841.05341.00151.02660.9434
AQI 0.60120.59840.56020.61450.37260.24010.23490.06590.1229-0
SGI 0.84130.74720.63750.54660.47930.47870.4860.46240.42270.45
DEPI 1.04470.99940.94660.5440.47220.470.37240.78581.68652.3507
SGAI 0.86590.80750.91251.01321.31911.51751.51771.64391.49961.3589
LVGI 1.09071.21041.21931.35621.38781.28491.31660.85690.59490.4552
TATA -0.1115-0.1214-0.1262-0.2016-0.3222-0.3297-0.3774-0.3092-0.1395-0.0831
M-score -3.61-3.75-3.61-4.10-4.39-4.57-4.98-4.53-3.14-2.92
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