Switch to:
GuruFocus has detected 3 Warning Signs with Weatherford International PLC $WFT.
More than 500,000 people have already joined GuruFocus to track the stocks they follow and exchange investment ideas.
Weatherford International PLC (NYSE:WFT)
Beneish M-Score
-3.89 (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.

Weatherford International PLC has a M-score of -3.89 suggests that the company is not a manipulator.

WFT' s Beneish M-Score Range Over the Past 10 Years
Min: -3.89   Max: 3.93
Current: -3.89

-3.89
3.93

During the past 13 years, the highest Beneish M-Score of Weatherford International PLC was 3.93. The lowest was -3.89. And the median was -2.40.


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 Weatherford International 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 * 1.1308+0.528 * 0.9989+0.404 * 0.9055+0.892 * 0.6749+0.115 * 0.9728
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0723+4.679 * -0.237-0.327 * 1.2476
=-3.89

* 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 $1,292 Mil.
Revenue was 1386 + 1406 + 1356 + 1402 = $5,550 Mil.
Gross Profit was 180 + 159 + 126 + 164 = $629 Mil.
Total Current Assets was $5,106 Mil.
Total Assets was $12,162 Mil.
Property, Plant and Equipment(Net PPE) was $4,265 Mil.
Depreciation, Depletion and Amortization(DDA) was $914 Mil.
Selling, General & Admin. Expense(SGA) was $1,063 Mil.
Total Current Liabilities was $2,447 Mil.
Long-Term Debt was $7,299 Mil.
Net Income was -448 + -549 + -1780 + -565 = $-3,342 Mil.
Non Operating Income was -73 + -2 + -10 + -85 = $-170 Mil.
Cash Flow from Operations was -179 + 136 + -106 + -141 = $-290 Mil.
Accounts Receivable was $1,693 Mil.
Revenue was 1585 + 2012 + 2237 + 2390 = $8,224 Mil.
Gross Profit was 111 + 78 + 368 + 374 = $931 Mil.
Total Current Assets was $5,366 Mil.
Total Assets was $14,516 Mil.
Property, Plant and Equipment(Net PPE) was $5,471 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,134 Mil.
Selling, General & Admin. Expense(SGA) was $1,469 Mil.
Total Current Liabilities was $3,478 Mil.
Long-Term Debt was $5,846 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)
=(1292 / 5550) / (1693 / 8224)
=0.23279279 / 0.20586089
=1.1308

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)
=(931 / 8224) / (629 / 5550)
=0.11320525 / 0.11333333
=0.9989

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 - (5106 + 4265) / 12162) / (1 - (5366 + 5471) / 14516)
=0.22948528 / 0.25344448
=0.9055

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
=5550 / 8224
=0.6749

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))
=(1134 / (1134 + 5471)) / (914 / (914 + 4265))
=0.17168812 / 0.17648195
=0.9728

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)
=(1063 / 5550) / (1469 / 8224)
=0.19153153 / 0.17862354
=1.0723

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)
=((7299 + 2447) / 12162) / ((5846 + 3478) / 14516)
=0.80134846 / 0.64232571
=1.2476

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
=(-3342 - -170 - -290) / 12162
=-0.237

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.

Weatherford International PLC has a M-score of -3.89 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.

Weatherford International PLC Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.05581.01581.11450.9070.96781.02580.85980.9210.93381.2741
GMI 1.01531.01281.30421.04191.011.1541.13830.83851.54571.5367
AQI 0.93130.8741.00470.98690.95540.83690.82611.02131.17761.085
SGI 1.19051.22580.92011.15711.27071.17151.00320.97690.63260.6095
DEPI 1.09531.1580.95590.87750.97221.00790.86760.95550.92530.9919
SGAI 0.95581.05491.27350.95430.84310.9421.05031.01011.23821.1517
LVGI 1.12251.15280.99511.04941.04421.11481.0420.98261.16841.1594
TATA 0.01570.0202-0.0252-0.061-0.0264-0.0833-0.0636-0.068-0.1768-0.233
M-score -2.23-2.25-2.45-2.72-2.40-2.70-2.94-2.97-3.44-3.43

Weatherford International PLC Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.9210.75240.78620.82570.93381.10391.1611.21291.27411.1308
GMI 0.83850.82540.93771.12251.54572.05672.17942.56231.53670.9989
AQI 1.02130.93151.06381.10591.17761.24861.23021.13781.0850.9055
SGI 0.97690.93920.86030.74710.63260.58290.56580.57010.60950.6749
DEPI 0.95550.90510.9750.95570.92530.94120.95360.92930.99190.9728
SGAI 1.01111.02821.09091.15421.24611.27991.24341.25981.15271.0723
LVGI 0.98260.99431.00381.04311.16841.09691.13741.27821.15941.2476
TATA -0.068-0.0932-0.1068-0.1136-0.1768-0.1953-0.1721-0.3009-0.233-0.237
M-score -2.97-3.33-3.33-3.34-3.44-3.10-2.90-3.34-3.43-3.89
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GF Chat

{{numOfNotice}}
FEEDBACK