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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 -3.60. 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 * 0.7225||+||0.528 * 0.952||+||0.404 * 0.947||+||0.892 * 0.8404||+||0.115 * 1.1066|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.01||+||4.679 * -0.1256||-||0.327 * 1.0127|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $540 Mil.|
Revenue was 793.555 + 804.342 + 804.74 + 828.796 = $3,231 Mil.
Gross Profit was 456.696 + 462.435 + 400.183 + 429.481 = $1,749 Mil.
Total Current Assets was $1,010 Mil.
Total Assets was $13,205 Mil.
Property, Plant and Equipment(Net PPE) was $11,970 Mil.
Depreciation, Depletion and Amortization(DDA) was $677 Mil.
Selling, General & Admin. Expense(SGA) was $100 Mil.
Total Current Liabilities was $954 Mil.
Long-Term Debt was $4,489 Mil.
Net Income was 159.031 + 178.403 + -609.569 + 127.175 = $-145 Mil.
Non Operating Income was 0 + 0 + -1.298 + 0 = $-1 Mil.
Cash Flow from Operations was 399.296 + 368.582 + 389.91 + 356.475 = $1,514 Mil.
|Accounts Receivable was $890 Mil.
Revenue was 803.781 + 795.187 + 1167.049 + 1078.881 = $3,845 Mil.
Gross Profit was 415.147 + 420.803 + 586.098 + 558.807 = $1,981 Mil.
Total Current Assets was $1,412 Mil.
Total Assets was $16,990 Mil.
Property, Plant and Equipment(Net PPE) was $15,274 Mil.
Depreciation, Depletion and Amortization(DDA) was $961 Mil.
Selling, General & Admin. Expense(SGA) was $118 Mil.
Total Current Liabilities was $901 Mil.
Long-Term Debt was $6,014 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)|
|=||(540.423 / 3231.433)||/||(889.942 / 3844.898)|
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)|
|=||(462.435 / 3844.898)||/||(456.696 / 3231.433)|
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 - (1010.304 + 11970.445) / 13204.716)||/||(1 - (1412.076 + 15273.529) / 16989.9)|
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))|
|=||(960.976 / (960.976 + 15273.529))||/||(676.509 / (676.509 + 11970.445))|
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)|
|=||(100.416 / 3231.433)||/||(118.294 / 3844.898)|
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)|
|=||((4488.541 + 953.894) / 13204.716)||/||((6013.946 + 900.814) / 16989.9)|
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|
|=||(-144.96 - -1.298||-||1514.263)||/||13204.716|
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 -3.51 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