Switch to:
Netflix Inc (NAS:NFLX)
Beneish M-Score
-2.13 (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 -2.13 signals that the company is a manipulator.

NFLX' s 10-Year Beneish M-Score Range
Min: -6.57   Max: -1.87
Current: -2.13

-6.57
-1.87

During the past 13 years, the highest Beneish M-Score of Netflix Inc was -1.87. 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 * 0.9275+0.404 * 1.0248+0.892 * 1.2583+0.115 * 0.9949
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0186+4.679 * 0.0355-0.327 * 1.0297
=-2.13

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $0 Mil.
Revenue was 1484.728 + 1409.432 + 1340.407 + 1270.089 = $5,505 Mil.
Gross Profit was 470.396 + 455.038 + 425.559 + 400.903 = $1,752 Mil.
Total Current Assets was $3,940 Mil.
Total Assets was $7,057 Mil.
Property, Plant and Equipment(Net PPE) was $150 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,765 Mil.
Selling, General & Admin. Expense(SGA) was $877 Mil.
Total Current Liabilities was $2,663 Mil.
Long-Term Debt was $900 Mil.
Net Income was 83.371 + 59.295 + 71.018 + 53.115 = $267 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was -38.461 + -37.439 + 56.024 + 36.359 = $16 Mil.
Accounts Receivable was $0 Mil.
Revenue was 1175.23 + 1105.999 + 1069.372 + 1023.961 = $4,375 Mil.
Gross Profit was 388.5 + 307.099 + 308.698 + 287.009 = $1,291 Mil.
Total Current Assets was $3,059 Mil.
Total Assets was $5,413 Mil.
Property, Plant and Equipment(Net PPE) was $134 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,242 Mil.
Selling, General & Admin. Expense(SGA) was $684 Mil.
Total Current Liabilities was $2,154 Mil.
Long-Term Debt was $500 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 / 5504.656) / (0 / 4374.562)
=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)
=(455.038 / 4374.562) / (470.396 / 5504.656)
=0.29518521 / 0.31825713
=0.9275

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 - (3940.469 + 149.875) / 7056.651) / (1 - (3058.763 + 133.605) / 5412.563)
=0.4203562 / 0.41019292
=1.0248

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
=5504.656 / 4374.562
=1.2583

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))
=(2241.68 / (2241.68 + 133.605)) / (2764.875 / (2764.875 + 149.875))
=0.94375201 / 0.9485805
=0.9949

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)
=(876.927 / 5504.656) / (684.19 / 4374.562)
=0.15930641 / 0.15640194
=1.0186

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)
=((900 + 2663.154) / 7056.651) / ((500 + 2154.203) / 5412.563)
=0.50493556 / 0.49037822
=1.0297

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
=(266.799 - 0 - 16.483) / 7056.651
=0.0355

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 -2.13 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 1.06340.85531.06661.04430.94110.95031.02451.33390.9230.9275
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 1.07730.99480.85570.81330.94710.95730.99751.01330.9341.0186
LVGI 1.00090.84221.14671.13271.65390.92890.8350.89291.03721.0297
TATA -0.3221-0.3344-0.3498-0.3266-0.3078-0.1177-0.0298-0.00110.00790.0355
M-score -3.54-3.69-3.78-3.96-3.98-2.74-1.87-2.12-2.29-2.13

Netflix Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1111111111
GMI 1.2511.33391.2371.13021.05130.9230.89520.88630.86480.9275
AQI 1.19031.11991.03411.1381.03141.02021.00150.99971.05591.0248
SGI 1.21021.12631.12151.1411.17091.2121.22781.24041.25351.2583
DEPI 0.8850.92680.95720.97220.97440.98350.98750.99340.99590.9949
SGAI 1.12231.01330.94720.91120.86670.9340.9650.96831.03041.0186
LVGI 0.85730.89291.03180.88720.9471.03720.95551.05591.0241.0297
TATA -0.0185-0.00460.01360.01520.01110.00790.00320.00610.02040.0355
M-score -2.16-2.14-2.18-2.11-2.20-2.29-2.30-2.31-2.22-2.13
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK