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GuruFocus has detected 2 Warning Signs with Newfield Exploration Co $NFX.
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Newfield Exploration Co (NYSE:NFX)
Beneish M-Score
-3.99 (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.

Newfield Exploration Co has a M-score of -3.99 suggests that the company is not a manipulator.

NFX' s Beneish M-Score Range Over the Past 10 Years
Min: -7.73   Max: -1.88
Current: -3.99

-7.73
-1.88

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 -3.10.


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 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 * 1.8342+0.528 * 1.0488+0.404 * 0.4074+0.892 * 0.9454+0.115 * 1.267
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9234+4.679 * -0.4337-0.327 * 1.1061
=-3.99

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $163 Mil.
Revenue was 415 + 392 + 381 + 284 = $1,472 Mil.
Gross Profit was 274 + 248 + 242 + 150 = $914 Mil.
Total Current Assets was $949 Mil.
Total Assets was $4,312 Mil.
Property, Plant and Equipment(Net PPE) was $3,307 Mil.
Depreciation, Depletion and Amortization(DDA) was $572 Mil.
Selling, General & Admin. Expense(SGA) was $213 Mil.
Total Current Liabilities was $684 Mil.
Long-Term Debt was $2,431 Mil.
Net Income was 13 + 48 + -667 + -624 = $-1,230 Mil.
Non Operating Income was -66 + 29 + -133 + -16 = $-186 Mil.
Cash Flow from Operations was 239 + 209 + 306 + 72 = $826 Mil.
Accounts Receivable was $94 Mil.
Revenue was 362 + 377 + 469 + 349 = $1,557 Mil.
Gross Profit was 234 + 241 + 327 + 212 = $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.



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)
=(163 / 1472) / (94 / 1557)
=0.1107337 / 0.06037251
=1.8342

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)
=(1014 / 1557) / (914 / 1472)
=0.65125241 / 0.62092391
=1.0488

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 - (949 + 3307) / 4312) / (1 - (625 + 3991) / 4768)
=0.01298701 / 0.03187919
=0.4074

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
=1472 / 1557
=0.9454

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))
=(917 / (917 + 3991)) / (572 / (572 + 3307))
=0.18683782 / 0.14746069
=1.267

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)
=(213 / 1472) / (244 / 1557)
=0.14470109 / 0.15671162
=0.9234

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)
=((2431 + 684) / 4312) / ((2467 + 647) / 4768)
=0.7224026 / 0.65310403
=1.1061

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
=(-1230 - -186 - 826) / 4312
=-0.4337

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 -3.99 suggests that the company will not 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 local exchange's currency.

Newfield Exploration Co Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.83290.90510.92240.67642.22191.23850.54530.42940.89121.8342
GMI 11111.32371.0270.99930.99541.13551.0488
AQI 0.31873.22880.39051.13471.0540.83490.85471.51651.35130.4074
SGI 1.06581.24790.60131.40730.92510.89671.18891.23210.68050.9454
DEPI 0.99480.95121.07321.1331.01740.71811.20311.04240.51871.267
SGAI 1.23252.0990.58980.76981.24721.30730.8730.82271.61510.9234
LVGI 0.86581.59371.03060.92691.01561.15541.05660.7761.5741.1061
TATA -0.0747-0.2253-0.3801-0.1882-0.1387-0.3094-0.1288-0.1139-1.0101-0.4337
M-score -3.20-2.89-4.86-3.16-1.92-3.99-3.36-3.02-7.73-3.99

Newfield Exploration Co Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.65650.42940.38761.35290.49830.89121.56180.40751.77381.8342
GMI 0.70520.99541.08241.17661.29611.13551.09541.07450.99141.0488
AQI 0.66891.51653.39915.03223.91211.35130.81320.48790.33210.4074
SGI 1.36441.23211.00390.86040.71640.68050.72220.73010.83960.9454
DEPI 1.01371.04240.99180.76230.59930.51870.54460.73961.03291.267
SGAI 0.80620.82270.99181.00981.38981.61511.36051.49891.19620.9234
LVGI 0.83940.7760.90450.94081.33211.5741.49321.63061.22681.1061
TATA -0.0953-0.1139-0.2015-0.411-0.7852-1.0101-0.9734-0.9704-0.6459-0.4337
M-score -3.12-3.02-2.94-2.49-5.76-7.73-7.07-8.30-5.31-3.99
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