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Netflix Inc (NAS:NFLX)
Beneish M-Score
-2.03 (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.

Netflix Inc has a M-score of -2.03 signals that the company is a manipulator.

NFLX' s Beneish M-Score Range Over the Past 10 Years
Min: -3.98   Max: -1.87
Current: -2.03

-3.98
-1.87

During the past 13 years, the highest Beneish M-Score of Netflix Inc was -1.87. The lowest was -3.98. And the median was -3.54.


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 Netflix Inc 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+0.528 * 0.9731+0.404 * 1.013+0.892 * 1.2398+0.115 * 0.9781
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.2311+4.679 * 0.0712-0.327 * 1.138
=-2.03

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $0 Mil.
Revenue was 1738.355 + 1644.694 + 1573.129 + 1484.728 = $6,441 Mil.
Gross Profit was 564.397 + 522.942 + 526.728 + 470.396 = $2,084 Mil.
Total Current Assets was $5,570 Mil.
Total Assets was $9,916 Mil.
Property, Plant and Equipment(Net PPE) was $181 Mil.
Depreciation, Depletion and Amortization(DDA) was $588 Mil.
Selling, General & Admin. Expense(SGA) was $1,178 Mil.
Total Current Liabilities was $3,341 Mil.
Long-Term Debt was $2,400 Mil.
Net Income was 29.432 + 26.335 + 23.696 + 83.371 = $163 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was -195.969 + -181.343 + -127.382 + -38.461 = $-543 Mil.
Accounts Receivable was $0 Mil.
Revenue was 1409.432 + 1340.407 + 1270.089 + 1175.23 = $5,195 Mil.
Gross Profit was 455.038 + 425.559 + 400.903 + 354.553 = $1,636 Mil.
Total Current Assets was $3,823 Mil.
Total Assets was $6,778 Mil.
Property, Plant and Equipment(Net PPE) was $144 Mil.
Depreciation, Depletion and Amortization(DDA) was $427 Mil.
Selling, General & Admin. Expense(SGA) was $772 Mil.
Total Current Liabilities was $2,549 Mil.
Long-Term Debt was $900 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)
=(0 / 6440.906) / (0 / 5195.158)
=0 / 0
=1

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)
=(522.942 / 5195.158) / (564.397 / 6440.906)
=0.31491881 / 0.32362885
=0.9731

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 - (5569.713 + 181.268) / 9916.267) / (1 - (3823.482 + 144.147) / 6778.329)
=0.42004577 / 0.41465972
=1.013

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
=6440.906 / 5195.158
=1.2398

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))
=(426.924 / (426.924 + 144.147)) / (587.976 / (587.976 + 181.268))
=0.7475848 / 0.76435565
=0.9781

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)
=(1177.68 / 6440.906) / (771.59 / 5195.158)
=0.18284384 / 0.14852099
=1.2311

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)
=((2400 + 3341.418) / 9916.267) / ((900 + 2548.655) / 6778.329)
=0.57898986 / 0.50877657
=1.138

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
=(162.834 - 0 - -543.155) / 9916.267
=0.0712

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.

Netflix Inc has a M-score of -2.03 signals that the company is likely to 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 own currency.

Netflix Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 1111111111
GMI 0.85531.06661.04430.94110.95031.02451.37040.92270.90310.9861
AQI 0.92591.35280.77040.94341.07321.65911.11991.02021.02661.0701
SGI 1.46091.20941.13221.22391.29481.48181.12631.2121.25831.2316
DEPI 0.98360.9931.12812.94260.98070.94110.26173.49181.00321.0027
SGAI 0.99480.85570.81330.94710.95730.99750.96940.92781.07171.1402
LVGI 0.84221.14671.13271.65390.92890.8350.89291.03721.02771.1477
TATA -0.3344-0.3498-0.3266-0.3078-0.1177-0.0298-0.00110.00730.03550.0855
M-score -3.69-3.78-3.96-3.76-2.74-1.86-2.17-2.00-2.14-1.92

Netflix Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1111111111
GMI 1.07570.92270.89390.88470.86270.90310.91790.94140.97310.9861
AQI 1.03141.02021.00150.99971.05591.02660.99981.01131.0131.0701
SGI 1.17091.2121.22781.24041.25351.25831.25691.24951.23981.2316
DEPI 0.89573.49181.70651.39761.26231.00320.92670.95960.97811.0027
SGAI 0.83030.92780.96080.96481.03021.07171.1351.23341.23111.1402
LVGI 0.9471.03720.95551.05591.0241.02771.1191.13821.1381.1477
TATA 0.01110.00730.00270.00570.020.03550.04160.05980.07120.0855
M-score -2.19-2.00-2.22-2.27-2.19-2.14-2.17-2.09-2.03-1.92
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