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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 0.86. The lowest was -8.28. And the median was -3.12.
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 * 0.4075||+||0.528 * 1.113||+||0.404 * 0.4879||+||0.892 * 0.7301||+||0.115 * 0.7396|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.4989||+||4.679 * -0.9704||-||0.327 * 1.6306|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $133 Mil.|
Revenue was 381 + 284 + 362 + 377 = $1,404 Mil.
Gross Profit was 242 + 150 + 191 + 254 = $837 Mil.
Total Current Assets was $638 Mil.
Total Assets was $4,285 Mil.
Property, Plant and Equipment(Net PPE) was $3,573 Mil.
Depreciation, Depletion and Amortization(DDA) was $769 Mil.
Selling, General & Admin. Expense(SGA) was $232 Mil.
Total Current Liabilities was $657 Mil.
Long-Term Debt was $2,430 Mil.
Net Income was -667 + -624 + -663 + -1227 = $-3,181 Mil.
Non Operating Income was -133 + -16 + 28 + 88 = $-33 Mil.
Cash Flow from Operations was 306 + 72 + 320 + 312 = $1,010 Mil.
|Accounts Receivable was $447 Mil.
Revenue was 469 + 349 + 495 + 610 = $1,923 Mil.
Gross Profit was 327 + 212 + 252 + 485 = $1,276 Mil.
Total Current Assets was $885 Mil.
Total Assets was $7,458 Mil.
Property, Plant and Equipment(Net PPE) was $6,309 Mil.
Depreciation, Depletion and Amortization(DDA) was $951 Mil.
Selling, General & Admin. Expense(SGA) was $212 Mil.
Total Current Liabilities was $845 Mil.
Long-Term Debt was $2,450 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)|
|=||(133 / 1404)||/||(447 / 1923)|
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)|
|=||(1276 / 1923)||/||(837 / 1404)|
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 - (638 + 3573) / 4285)||/||(1 - (885 + 6309) / 7458)|
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))|
|=||(951 / (951 + 6309))||/||(769 / (769 + 3573))|
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)|
|=||(232 / 1404)||/||(212 / 1923)|
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)|
|=||((2430 + 657) / 4285)||/||((2450 + 845) / 7458)|
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|
|=||(-3181 - -33||-||1010)||/||4285|
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 -8.28 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