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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.
Newfield Exploration Co has a M-score of -3.33 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Newfield Exploration Co was 0.84. The lowest was -5.95. And the median was -3.08.
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 * 0.8827||+||0.528 * 1.1526||+||0.404 * 0.2904||+||0.892 * 0.9139||+||0.115 * 1.1144|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2593||+||4.679 * -0.0961||-||0.327 * 0.9257|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $384 Mil.|
Revenue was 608 + 553 + 498 + 486 = $2,145 Mil.
Gross Profit was 460 + 417 + 498 + 486 = $1,861 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.
Net Income was -22 + 284 + 17 + 27 = $306 Mil.
Non Operating Income was -173 + -94 + -36 + -98 = $-401 Mil.
Cash Flow from Operations was 368 + 365 + 350 + 485 = $1,568 Mil.
|Accounts Receivable was $476 Mil.
Revenue was 435 + 651 + 646 + 615 = $2,347 Mil.
Gross Profit was 435 + 651 + 646 + 615 = $2,347 Mil.
Total Current Assets was $759 Mil.
Total Assets was $8,381 Mil.
Property, Plant and Equipment(Net PPE) was $7,419 Mil.
Depreciation, Depletion and Amortization(DDA) was $929 Mil.
Selling, General & Admin. Expense(SGA) was $212 Mil.
Total Current Liabilities was $976 Mil.
Long-Term Debt was $3,276 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)|
|=||(384 / 2145)||/||(476 / 2347)|
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)|
|=||(417 / 2347)||/||(460 / 2145)|
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 - (528 + 8365) / 8956)||/||(1 - (759 + 7419) / 8381)|
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))|
|=||(929 / (929 + 7419))||/||(928 / (928 + 8365))|
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 / 2145)||/||(212 / 2347)|
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)|
|=||((3077 + 1129) / 8956)||/||((3276 + 976) / 8381)|
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|
|=||(306 - -401||-||1568)||/||8956|
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 -3.33 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