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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 0.84. The lowest was -6.21. And the median was -3.11.
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 * 0.6486||+||0.528 * 0.6657||+||0.404 * 0.6689||+||0.892 * 1.381||+||0.115 * 1.0137|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.7965||+||4.679 * -0.0953||-||0.327 * 0.8394|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $395 Mil.|
Revenue was 610 + 608 + 553 + 498 = $2,269 Mil.
Gross Profit was 453 + 460 + 417 + 369 = $1,699 Mil.
Total Current Assets was $906 Mil.
Total Assets was $9,068 Mil.
Property, Plant and Equipment(Net PPE) was $8,051 Mil.
Depreciation, Depletion and Amortization(DDA) was $931 Mil.
Selling, General & Admin. Expense(SGA) was $231 Mil.
Total Current Liabilities was $925 Mil.
Long-Term Debt was $3,046 Mil.
Net Income was 278 + -22 + 284 + 17 = $557 Mil.
Non Operating Income was 304 + -173 + -94 + -36 = $1 Mil.
Cash Flow from Operations was 337 + 368 + 365 + 350 = $1,420 Mil.
|Accounts Receivable was $441 Mil.
Revenue was 486 + 435 + 370 + 352 = $1,643 Mil.
Gross Profit was 363 + 307 + 270 + -121 = $819 Mil.
Total Current Assets was $773 Mil.
Total Assets was $8,743 Mil.
Property, Plant and Equipment(Net PPE) was $7,810 Mil.
Depreciation, Depletion and Amortization(DDA) was $917 Mil.
Selling, General & Admin. Expense(SGA) was $210 Mil.
Total Current Liabilities was $1,076 Mil.
Long-Term Debt was $3,485 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)|
|=||(395 / 2269)||/||(441 / 1643)|
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)|
|=||(460 / 1643)||/||(453 / 2269)|
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 - (906 + 8051) / 9068)||/||(1 - (773 + 7810) / 8743)|
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))|
|=||(917 / (917 + 7810))||/||(931 / (931 + 8051))|
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)|
|=||(231 / 2269)||/||(210 / 1643)|
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)|
|=||((3046 + 925) / 9068)||/||((3485 + 1076) / 8743)|
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|
|=||(557 - 1||-||1420)||/||9068|
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 -3.13 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