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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 -2.64.
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 * 0.723||+||0.528 * 0.9371||+||0.404 * 0.5537||+||0.892 * 0.8334||+||0.115 * 1.0111|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9181||+||4.679 * -0.1004||-||0.327 * 0.9198|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $320 Mil.|
Revenue was 385.153 + 894.783 + 611.973 + 857.684 = $2,750 Mil.
Gross Profit was 168.807 + 636.309 + 344.719 + 544.495 = $1,694 Mil.
Total Current Assets was $884 Mil.
Total Assets was $12,584 Mil.
Property, Plant and Equipment(Net PPE) was $11,592 Mil.
Depreciation, Depletion and Amortization(DDA) was $616 Mil.
Selling, General & Admin. Expense(SGA) was $70 Mil.
Total Current Liabilities was $684 Mil.
Long-Term Debt was $3,830 Mil.
Net Income was -55.081 + 322.866 + 105.485 + -152.241 = $221 Mil.
Non Operating Income was 0 + 11.066 + 0 + 0 = $11 Mil.
Cash Flow from Operations was 101.118 + 686.756 + 174.801 + 510.126 = $1,473 Mil.
|Accounts Receivable was $530 Mil.
Revenue was 896.671 + 793.555 + 804.342 + 804.74 = $3,299 Mil.
Gross Profit was 585.821 + 456.696 + 462.435 + 400.183 = $1,905 Mil.
Total Current Assets was $936 Mil.
Total Assets was $13,058 Mil.
Property, Plant and Equipment(Net PPE) was $11,919 Mil.
Depreciation, Depletion and Amortization(DDA) was $641 Mil.
Selling, General & Admin. Expense(SGA) was $91 Mil.
Total Current Liabilities was $904 Mil.
Long-Term Debt was $4,189 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)|
|=||(319.567 / 2749.593)||/||(530.401 / 3299.308)|
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)|
|=||(1905.135 / 3299.308)||/||(1694.33 / 2749.593)|
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 - (883.784 + 11591.788) / 12584.138)||/||(1 - (935.877 + 11918.667) / 13058.018)|
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))|
|=||(641.08 / (641.08 + 11918.667))||/||(616.299 / (616.299 + 11591.788))|
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)|
|=||(69.631 / 2749.593)||/||(91.01 / 3299.308)|
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)|
|=||((3830.224 + 684.118) / 12584.138)||/||((4188.727 + 904.196) / 13058.018)|
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|
|=||(221.029 - 11.066||-||1472.801)||/||12584.138|
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 -3.53 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