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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 Newfield Exploration Co was -1.88. The lowest was -7.73. And the median was -3.09.
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 Newfield Exploration Co 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 * 0.8912||+||0.528 * 1.1355||+||0.404 * 1.3513||+||0.892 * 0.6805||+||0.115 * 0.5187|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.6151||+||4.679 * -1.0101||-||0.327 * 1.574|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $94 Mil.|
Revenue was 362 + 377 + 469 + 349 = $1,557 Mil.
Gross Profit was 191 + 254 + 344 + 225 = $1,014 Mil.
Total Current Assets was $625 Mil.
Total Assets was $4,768 Mil.
Property, Plant and Equipment(Net PPE) was $3,991 Mil.
Depreciation, Depletion and Amortization(DDA) was $917 Mil.
Selling, General & Admin. Expense(SGA) was $244 Mil.
Total Current Liabilities was $647 Mil.
Long-Term Debt was $2,467 Mil.
Net Income was -663 + -1227 + -992 + -480 = $-3,362 Mil.
Non Operating Income was 28 + 88 + -32 + 161 = $245 Mil.
Cash Flow from Operations was 320 + 312 + 372 + 205 = $1,209 Mil.
|Accounts Receivable was $155 Mil.
Revenue was 495 + 610 + 612 + 571 = $2,288 Mil.
Gross Profit was 252 + 485 + 495 + 460 = $1,692 Mil.
Total Current Assets was $940 Mil.
Total Assets was $9,580 Mil.
Property, Plant and Equipment(Net PPE) was $8,414 Mil.
Depreciation, Depletion and Amortization(DDA) was $903 Mil.
Selling, General & Admin. Expense(SGA) was $222 Mil.
Total Current Liabilities was $1,101 Mil.
Long-Term Debt was $2,874 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)|
|=||(94 / 1557)||/||(155 / 2288)|
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)|
|=||(254 / 2288)||/||(191 / 1557)|
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 - (625 + 3991) / 4768)||/||(1 - (940 + 8414) / 9580)|
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))|
|=||(903 / (903 + 8414))||/||(917 / (917 + 3991))|
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)|
|=||(244 / 1557)||/||(222 / 2288)|
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)|
|=||((2467 + 647) / 4768)||/||((2874 + 1101) / 9580)|
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|
|=||(-3362 - 245||-||1209)||/||4768|
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.
Newfield Exploration Co has a M-score of -7.73 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
Newfield Exploration Co Annual Data
Newfield Exploration Co Quarterly Data