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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.
During the past 13 years, the highest Beneish M-Score of Nabors Industries Ltd was -1.26. The lowest was -4.00. And the median was -2.63.
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 Nabors Industries 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 * 1.3065||+||0.528 * 1.1083||+||0.404 * 0.9399||+||0.892 * 0.4427||+||0.115 * 1.0525|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.4962||+||4.679 * -0.1332||-||0.327 * 1.0497|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $504 Mil.|
Revenue was 520.041 + 517.092 + 430.763 + 693.685 = $2,162 Mil.
Gross Profit was 213.605 + 175.813 + 65.74 + 248.555 = $704 Mil.
Total Current Assets was $1,072 Mil.
Total Assets was $8,425 Mil.
Property, Plant and Equipment(Net PPE) was $6,617 Mil.
Depreciation, Depletion and Amortization(DDA) was $888 Mil.
Selling, General & Admin. Expense(SGA) was $236 Mil.
Total Current Liabilities was $788 Mil.
Long-Term Debt was $3,476 Mil.
Net Income was -111.211 + -184.65 + -398.294 + -163.654 = $-858 Mil.
Non Operating Income was -10.392 + -74.607 + -182.404 + -124.568 = $-392 Mil.
Cash Flow from Operations was 68.096 + 175.166 + 161.506 + 251.545 = $656 Mil.
|Accounts Receivable was $871 Mil.
Revenue was 812.431 + 863.37 + 1422.178 + 1785.003 = $4,883 Mil.
Gross Profit was 294.257 + 374.848 + 502.568 + 590.159 = $1,762 Mil.
Total Current Assets was $1,719 Mil.
Total Assets was $9,929 Mil.
Property, Plant and Equipment(Net PPE) was $7,288 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,037 Mil.
Selling, General & Admin. Expense(SGA) was $356 Mil.
Total Current Liabilities was $1,050 Mil.
Long-Term Debt was $3,738 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(503.966 / 2161.581)||/||(871.385 / 4882.982)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(1761.832 / 4882.982)||/||(703.713 / 2161.581)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (1072.08 + 6616.711) / 8424.504)||/||(1 - (1719.075 + 7287.531) / 9929.181)|
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.
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))|
|=||(1036.663 / (1036.663 + 7287.531))||/||(888.033 / (888.033 + 6616.711))|
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)|
|=||(236.092 / 2161.581)||/||(356.445 / 4882.982)|
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)|
|=||((3475.978 + 787.862) / 8424.504)||/||((3737.773 + 1049.551) / 9929.181)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(-857.809 - -391.971||-||656.313)||/||8424.504|
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.
Nabors Industries Ltd has a M-score of -3.38 suggests that the company will not be a manipulator.
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
Nabors Industries Ltd Annual Data
Nabors Industries Ltd Quarterly Data