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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 -2.61.
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 * 0.4413||+||0.528 * 0.9741||+||0.404 * 1.142||+||0.892 * 1.597||+||0.115 * 0.8292|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.6167||+||4.679 * -0.0755||-||0.327 * 0.9664|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $610 Mil.|
Revenue was 828.796 + 1240.363 + 1251.17 + 2421.236 = $5,742 Mil.
Gross Profit was 429.481 + 634.508 + 653.207 + 1169.344 = $2,887 Mil.
Total Current Assets was $1,031 Mil.
Total Assets was $13,950 Mil.
Property, Plant and Equipment(Net PPE) was $12,634 Mil.
Depreciation, Depletion and Amortization(DDA) was $933 Mil.
Selling, General & Admin. Expense(SGA) was $109 Mil.
Total Current Liabilities was $656 Mil.
Long-Term Debt was $4,737 Mil.
Net Income was 127.175 + 234.559 + 256.326 + 174.06 = $792 Mil.
Non Operating Income was 0 + 0 + -83.164 + 0 = $-83 Mil.
Cash Flow from Operations was 356.475 + 526.027 + 505.796 + 540.663 = $1,929 Mil.
|Accounts Receivable was $866 Mil.
Revenue was 640.513 + 1017.385 + 970.975 + 966.367 = $3,595 Mil.
Gross Profit was 340.188 + 497.364 + 463.678 + 459.417 = $1,761 Mil.
Total Current Assets was $1,375 Mil.
Total Assets was $15,729 Mil.
Property, Plant and Equipment(Net PPE) was $14,072 Mil.
Depreciation, Depletion and Amortization(DDA) was $851 Mil.
Selling, General & Admin. Expense(SGA) was $111 Mil.
Total Current Liabilities was $985 Mil.
Long-Term Debt was $5,308 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)|
|=||(610.134 / 5741.565)||/||(865.746 / 3595.24)|
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)|
|=||(634.508 / 3595.24)||/||(429.481 / 5741.565)|
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 - (1031.045 + 12633.666) / 13950.197)||/||(1 - (1375.003 + 14072.457) / 15729.331)|
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))|
|=||(851.298 / (851.298 + 14072.457))||/||(933.346 / (933.346 + 12633.666))|
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)|
|=||(109.12 / 5741.565)||/||(110.797 / 3595.24)|
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)|
|=||((4737.081 + 656.01) / 13950.197)||/||((5307.838 + 984.586) / 15729.331)|
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|
|=||(792.12 - -83.164||-||1928.961)||/||13950.197|
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 -2.71 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