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Netflix Inc (NAS:NFLX)
Beneish M-Score
-2.16 (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 -2.16 signals that the company is a manipulator.

NFLX' s 10-Year Beneish M-Score Range
Min: -6.57   Max: -1.82
Current: -2.16

-6.57
-1.82

During the past 13 years, the highest Beneish M-Score of Netflix Inc was -1.82. The lowest was -6.57. 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 * 0.9179+0.404 * 0.9998+0.892 * 1.2569+0.115 * 0.9933
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.135+4.679 * 0.0416-0.327 * 1.119
=-2.16

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $0 Mil.
Revenue was 1573.129 + 1484.728 + 1409.432 + 1340.407 = $5,808 Mil.
Gross Profit was 526.728 + 470.396 + 455.038 + 425.559 = $1,878 Mil.
Total Current Assets was $5,539 Mil.
Total Assets was $9,241 Mil.
Property, Plant and Equipment(Net PPE) was $146 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,938 Mil.
Selling, General & Admin. Expense(SGA) was $970 Mil.
Total Current Liabilities was $3,009 Mil.
Long-Term Debt was $2,400 Mil.
Net Income was 23.696 + 83.371 + 59.295 + 71.018 = $237 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was -127.382 + -38.461 + -37.439 + 56.024 = $-147 Mil.
Accounts Receivable was $0 Mil.
Revenue was 1270.089 + 1175.23 + 1105.999 + 1069.372 = $4,621 Mil.
Gross Profit was 400.903 + 354.553 + 307.099 + 308.698 = $1,371 Mil.
Total Current Assets was $3,587 Mil.
Total Assets was $6,048 Mil.
Property, Plant and Equipment(Net PPE) was $133 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,355 Mil.
Selling, General & Admin. Expense(SGA) was $680 Mil.
Total Current Liabilities was $2,264 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 / 5807.696) / (0 / 4620.69)
=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)
=(470.396 / 4620.69) / (526.728 / 5807.696)
=0.29676369 / 0.32331599
=0.9179

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 - (5539.056 + 145.816) / 9240.626) / (1 - (3586.784 + 133.473) / 6048.106)
=0.38479579 / 0.38488892
=0.9998

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
=5807.696 / 4620.69
=1.2569

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))
=(2354.89 / (2354.89 + 133.473)) / (2938.43 / (2938.43 + 145.816))
=0.94636112 / 0.95272232
=0.9933

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)
=(970.095 / 5807.696) / (680.029 / 4620.69)
=0.16703612 / 0.14717044
=1.135

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 + 3008.849) / 9240.626) / ((900 + 2263.653) / 6048.106)
=0.58533361 / 0.52308161
=1.119

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
=(237.38 - 0 - -147.258) / 9240.626
=0.0416

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 -2.16 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1111111111
GMI 1.06340.85531.06661.04430.94110.95031.02451.33390.9480.9031
AQI 1.21990.92591.35280.77040.94341.07321.65911.11991.02021.0248
SGI 1.36281.46091.20941.13221.22391.29481.48181.12631.2121.2583
DEPI 1.13490.98360.9931.12810.99690.91290.84260.92680.98350.9946
SGAI 1.07730.99480.85570.81330.94710.95730.99751.01330.88761.0717
LVGI 1.00090.84221.14671.13271.65390.92890.8350.89291.03721.0297
TATA -0.3221-0.3344-0.3498-0.3266-0.3078-0.1177-0.0298-0.00110.00730.0355
M-score -3.54-3.69-3.78-3.96-3.98-2.74-1.87-2.12-2.27-2.15

Netflix Inc Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 1111111111
GMI 1.33391.2371.13021.05130.9480.91740.90650.88280.90310.9179
AQI 1.11991.03411.1381.03141.02021.00150.99971.05591.02480.9998
SGI 1.12631.12151.1411.17091.2121.22781.24041.25351.25831.2569
DEPI 0.92680.95720.97220.97440.98350.98750.9930.99560.99460.9933
SGAI 1.01330.94720.91120.86670.88760.91910.92360.98691.07171.135
LVGI 0.89291.03180.88720.9471.03720.95551.05591.0241.02971.119
TATA -0.00460.01360.01520.01110.00730.00270.00570.020.03550.0416
M-score -2.14-2.18-2.11-2.20-2.27-2.28-2.29-2.21-2.15-2.16
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