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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 -3.07.
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 * 1.3376||+||0.528 * 1.063||+||0.404 * 5.0322||+||0.892 * 0.8702||+||0.115 * 0.7623|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9984||+||4.679 * -0.411||-||0.327 * 0.9408|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $447 Mil.|
Revenue was 469 + 349 + 517 + 610 = $1,945 Mil.
Gross Profit was 344 + 225 + 463 + 453 = $1,485 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.
Net Income was -992 + -480 + 360 + 278 = $-834 Mil.
Non Operating Income was -32 + 161 + 567 + 304 = $1,000 Mil.
Cash Flow from Operations was 372 + 205 + 317 + 337 = $1,231 Mil.
|Accounts Receivable was $384 Mil.
Revenue was 612 + 571 + 566 + 486 = $2,235 Mil.
Gross Profit was 495 + 460 + 496 + 363 = $1,814 Mil.
Total Current Assets was $528 Mil.
Total Assets was $8,956 Mil.
Property, Plant and Equipment(Net PPE) was $8,365 Mil.
Depreciation, Depletion and Amortization(DDA) was $928 Mil.
Selling, General & Admin. Expense(SGA) was $244 Mil.
Total Current Liabilities was $1,129 Mil.
Long-Term Debt was $3,077 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)|
|=||(447 / 1945)||/||(384 / 2235)|
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)|
|=||(225 / 2235)||/||(344 / 1945)|
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 - (885 + 6309) / 7458)||/||(1 - (528 + 8365) / 8956)|
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))|
|=||(928 / (928 + 8365))||/||(951 / (951 + 6309))|
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)|
|=||(212 / 1945)||/||(244 / 2235)|
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)|
|=||((2450 + 845) / 7458)||/||((3077 + 1129) / 8956)|
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|
|=||(-834 - 1000||-||1231)||/||7458|
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 -2.55 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