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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 Noble Corp PLC was 9.08. The lowest was -3.59. And the median was -2.62.
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 Noble Corp 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 * 0.5859||+||0.528 * 0.9835||+||0.404 * 1.2575||+||0.892 * 1.1573||+||0.115 * 0.9696|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.769||+||4.679 * -0.1299||-||0.327 * 1.028|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $595 Mil.|
Revenue was 804.342 + 804.74 + 828.796 + 1240.363 = $3,678 Mil.
Gross Profit was 462.435 + 400.183 + 429.481 + 634.508 = $1,927 Mil.
Total Current Assets was $862 Mil.
Total Assets was $13,158 Mil.
Property, Plant and Equipment(Net PPE) was $12,047 Mil.
Depreciation, Depletion and Amortization(DDA) was $772 Mil.
Selling, General & Admin. Expense(SGA) was $105 Mil.
Total Current Liabilities was $585 Mil.
Long-Term Debt was $4,862 Mil.
Net Income was 178.403 + -609.569 + 127.175 + 234.559 = $-69 Mil.
Non Operating Income was 0 + -1.298 + 0 + 0 = $-1 Mil.
Cash Flow from Operations was 368.582 + 389.91 + 356.475 + 526.027 = $1,641 Mil.
|Accounts Receivable was $877 Mil.
Revenue was 795.187 + 725.089 + 640.513 + 1017.385 = $3,178 Mil.
Gross Profit was 420.803 + 378.791 + 340.188 + 497.364 = $1,637 Mil.
Total Current Assets was $1,372 Mil.
Total Assets was $16,444 Mil.
Property, Plant and Equipment(Net PPE) was $14,826 Mil.
Depreciation, Depletion and Amortization(DDA) was $919 Mil.
Selling, General & Admin. Expense(SGA) was $118 Mil.
Total Current Liabilities was $895 Mil.
Long-Term Debt was $5,729 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)|
|=||(594.72 / 3678.241)||/||(877.127 / 3178.174)|
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)|
|=||(400.183 / 3178.174)||/||(462.435 / 3678.241)|
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 - (862.363 + 12046.683) / 13157.973)||/||(1 - (1371.536 + 14825.569) / 16444.497)|
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))|
|=||(919.171 / (919.171 + 14825.569))||/||(771.78 / (771.78 + 12046.683))|
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)|
|=||(105.072 / 3678.241)||/||(118.064 / 3178.174)|
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)|
|=||((4862.361 + 585.423) / 13157.973)||/||((5728.782 + 894.515) / 16444.497)|
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|
|=||(-69.432 - -1.298||-||1640.994)||/||13157.973|
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.
Noble Corp PLC has a M-score of -3.21 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
Noble Corp PLC Annual Data
Noble Corp PLC Quarterly Data