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Netflix Inc (NAS:NFLX)
Beneish M-Score
-1.68 (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 -1.68 signals that the company is a manipulator.

NFLX' s Beneish M-Score Range Over the Past 10 Years
Min: -4.46   Max: -1.68
Current: -1.68

-4.46
-1.68

During the past 13 years, the highest Beneish M-Score of Netflix Inc was -1.68. The lowest was -4.46. And the median was -2.96.


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 * 1.0446+0.404 * 1.2962+0.892 * 1.2475+0.115 * 1.0424
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9938+4.679 * 0.0894-0.327 * 0.952
=-1.68

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $0 Mil.
Revenue was 2105.204 + 1957.736 + 1823.333 + 1738.355 = $7,625 Mil.
Gross Profit was 632.106 + 588.196 + 573.968 + 564.397 = $2,359 Mil.
Total Current Assets was $5,387 Mil.
Total Assets was $11,594 Mil.
Property, Plant and Equipment(Net PPE) was $163 Mil.
Depreciation, Depletion and Amortization(DDA) was $-1,554 Mil.
Selling, General & Admin. Expense(SGA) was $1,342 Mil.
Total Current Liabilities was $4,052 Mil.
Long-Term Debt was $2,373 Mil.
Net Income was 40.755 + 27.658 + 43.178 + 29.432 = $141 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was -226.293 + -228.59 + -244.745 + -195.969 = $-896 Mil.
Accounts Receivable was $0 Mil.
Revenue was 1644.694 + 1573.129 + 1484.728 + 1409.432 = $6,112 Mil.
Gross Profit was 522.942 + 526.728 + 470.396 + 455.038 = $1,975 Mil.
Total Current Assets was $5,601 Mil.
Total Assets was $9,655 Mil.
Property, Plant and Equipment(Net PPE) was $171 Mil.
Depreciation, Depletion and Amortization(DDA) was $-1,213 Mil.
Selling, General & Admin. Expense(SGA) was $1,082 Mil.
Total Current Liabilities was $3,220 Mil.
Long-Term Debt was $2,400 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 / 7624.628) / (0 / 6111.983)
=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)
=(1975.104 / 6111.983) / (2358.667 / 7624.628)
=0.32315273 / 0.30934847
=1.0446

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 - (5386.918 + 162.864) / 11593.507) / (1 - (5600.51 + 171.396) / 9654.861)
=0.52130257 / 0.40217617
=1.2962

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
=7624.628 / 6111.983
=1.2475

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))
=(-1213.399 / (-1213.399 + 171.396)) / (-1553.652 / (-1553.652 + 162.864))
=1.16448705 / 1.11710196
=1.0424

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)
=(1341.88 / 7624.628) / (1082.364 / 6111.983)
=0.17599285 / 0.17708884
=0.9938

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)
=((2373.085 + 4051.837) / 11593.507) / ((2400 + 3220.069) / 9654.861)
=0.55418279 / 0.58209735
=0.952

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
=(141.023 - 0 - -895.597) / 11593.507
=0.0894

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 -1.68 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 0.86021.06661.04430.94110.95031.02451.33390.9230.92750.9861
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 0.98360.9931.12710.99782.89480.94110.94640.96560.28013.5908
SGAI 0.96450.85570.81330.94710.97360.98081.01330.9341.01861.1402
LVGI 0.84221.14671.13271.65390.92890.8350.89291.03721.02771.1477
TATA -0.3265-0.329-0.3266-0.3078-0.1177-0.0298-0.00140.00790.03550.0855
M-score -3.64-3.68-3.96-3.98-2.52-1.86-2.12-2.29-2.21-1.63

Netflix Inc Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 1111111111
GMI 0.89390.88470.86270.90310.91790.94140.97310.98611.02971.0446
AQI 1.00150.99971.05591.02660.99981.01131.0131.07011.28121.2962
SGI 1.22781.24041.25351.25831.25691.24951.23981.23161.23361.2475
DEPI 1.70651.39761.26231.00320.40510.57720.61550.23541.20721.0424
SGAI 0.96080.96481.03021.07171.1351.23341.23111.14021.070.9938
LVGI 0.95551.05591.0241.02771.1191.13821.1381.14770.95660.952
TATA 0.00270.00570.020.03550.04160.05980.07120.08550.08680.0894
M-score -2.22-2.27-2.19-2.14-2.23-2.14-2.07-2.01-1.71-1.68
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