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GuruFocus has detected 4 Warning Signs with Nabors Industries Ltd $NBR.
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Nabors Industries Ltd (NYSE:NBR)
Beneish M-Score
-3.35 (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.

Nabors Industries Ltd has a M-score of -3.35 suggests that the company is not a manipulator.

NBR' s Beneish M-Score Range Over the Past 10 Years
Min: -3.86   Max: -1.54
Current: -3.35

-3.86
-1.54

During the past 13 years, the highest Beneish M-Score of Nabors Industries Ltd was -1.54. The lowest was -3.86. And the median was -2.64.


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 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 * 1.2239+0.528 * 1.1343+0.404 * 0.8602+0.892 * 0.5293+0.115 * 0.9934
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.3259+4.679 * -0.1245-0.327 * 1.0997
=-3.35

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $508 Mil.
Revenue was 539.212 + 520.041 + 517.092 + 430.763 = $2,007 Mil.
Gross Profit was 207.652 + 213.605 + 175.813 + 65.74 = $663 Mil.
Total Current Assets was $1,156 Mil.
Total Assets was $8,187 Mil.
Property, Plant and Equipment(Net PPE) was $6,268 Mil.
Depreciation, Depletion and Amortization(DDA) was $876 Mil.
Selling, General & Admin. Expense(SGA) was $228 Mil.
Total Current Liabilities was $822 Mil.
Long-Term Debt was $3,578 Mil.
Net Income was -335.587 + -111.211 + -184.65 + -398.294 = $-1,030 Mil.
Non Operating Income was -275.27 + -10.392 + -74.607 + -182.404 = $-543 Mil.
Cash Flow from Operations was 127.137 + 68.096 + 175.166 + 161.506 = $532 Mil.
Accounts Receivable was $785 Mil.
Revenue was 693.685 + 812.431 + 863.37 + 1422.178 = $3,792 Mil.
Gross Profit was 248.555 + 294.257 + 374.848 + 502.568 = $1,420 Mil.
Total Current Assets was $1,476 Mil.
Total Assets was $9,538 Mil.
Property, Plant and Equipment(Net PPE) was $7,028 Mil.
Depreciation, Depletion and Amortization(DDA) was $975 Mil.
Selling, General & Admin. Expense(SGA) was $324 Mil.
Total Current Liabilities was $1,006 Mil.
Long-Term Debt was $3,655 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)
=(508.355 / 2007.108) / (784.671 / 3791.664)
=0.25327735 / 0.20694634
=1.2239

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)
=(1420.228 / 3791.664) / (662.81 / 2007.108)
=0.37456589 / 0.33023136
=1.1343

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 - (1155.839 + 6267.583) / 8187.015) / (1 - (1475.897 + 7027.802) / 9537.84)
=0.09326879 / 0.10842507
=0.8602

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
=2007.108 / 3791.664
=0.5293

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))
=(975.287 / (975.287 + 7027.802)) / (876.37 / (876.37 + 6267.583))
=0.12186382 / 0.12267298
=0.9934

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)
=(227.639 / 2007.108) / (324.328 / 3791.664)
=0.11341642 / 0.08553712
=1.3259

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)
=((3578.335 + 821.934) / 8187.015) / ((3655.2 + 1006.499) / 9537.84)
=0.53746927 / 0.48875836
=1.0997

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
=(-1029.742 - -542.673 - 531.905) / 8187.015
=-0.1245

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 -3.35 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.

Nabors Industries Ltd Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.91551.04050.9311.31250.96350.81091.0720.99490.92871.2239
GMI 1.08991.0650.94681.02771.09261.1440.93741.07190.90351.1343
AQI 0.89150.80980.79681.35460.8840.69311.03710.6622.46440.8602
SGI 1.02291.07350.671.17491.46561.08150.94431.08980.55680.5293
DEPI 0.94130.9550.98250.88650.88840.95840.9530.9620.9690.9934
SGAI 1.02371.02481.33140.67340.98261.00070.96260.95611.16491.3259
LVGI 0.89410.94630.95041.04841.06320.91420.98491.15940.98281.0997
TATA -0.0424-0.1126-0.1849-0.0776-0.0936-0.0983-0.0784-0.1194-0.0943-0.1245
M-score -2.71-2.94-3.86-2.21-2.56-3.07-2.84-3.11-2.87-3.35

Nabors Industries Ltd Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.1250.99490.62530.67890.72850.92871.45171.33031.30651.2239
GMI 1.06261.07191.01660.97970.95630.90350.97761.1161.10831.1343
AQI 1.00220.6621.57091.70521.44692.46440.8060.74410.93990.8602
SGI 1.05981.08981.06830.92390.73640.55680.42150.41710.44270.5293
DEPI 1.06590.9620.8360.87320.87970.9691.16871.07841.05210.9934
SGAI 0.90230.95610.9320.94350.97451.16491.33731.42731.49621.3259
LVGI 1.06231.15941.13161.10141.07290.98281.06151.08081.04971.0997
TATA -0.1022-0.1194-0.119-0.1129-0.1025-0.0943-0.1159-0.1244-0.1332-0.1245
M-score -2.75-3.11-3.13-3.14-3.32-2.87-3.27-3.41-3.38-3.35
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