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Newfield Exploration Co (NYSE:NFX)
Beneish M-Score
-2.75 (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 -2.75 suggests that the company is not a manipulator.

NFX' s 10-Year Beneish M-Score Range
Min: -5.95   Max: 0.84
Current: -2.75

-5.95
0.84

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 -3.10.


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 * 0.8756+0.528 * 1.6832+0.404 * 0.6689+0.892 * 1.023+0.115 * 1.0137
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0552+4.679 * -0.0953-0.327 * 0.8394
=-2.75

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

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 + 18 = $1,348 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 + 651 + 646 = $2,218 Mil.
Gross Profit was 486 + 435 + 651 + 646 = $2,218 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 $214 Mil.
Total Current Liabilities was $1,076 Mil.
Long-Term Debt was $3,485 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)
=(395 / 2269) / (441 / 2218)
=0.1740855 / 0.19882777
=0.8756

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)
=(460 / 2218) / (453 / 2269)
=1 / 0.59409431
=1.6832

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 - (906 + 8051) / 9068) / (1 - (773 + 7810) / 8743)
=0.01224085 / 0.01830035
=0.6689

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
=2269 / 2218
=1.023

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))
=0.1050762 / 0.10365175
=1.0137

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) / (214 / 2218)
=0.10180696 / 0.09648332
=1.0552

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)
=0.43791354 / 0.52167448
=0.8394

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
=(557 - 1 - 1420) / 9068
=-0.0953

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 -2.75 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 own currency.

Newfield Exploration Co Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.38181.14681.0760.82410.90511.50330.4151.15461.45031.5047
GMI 1111111111.3667
AQI 2.58270.66440.69680.94983.22880.39051.13471.0540.83490.8547
SGI 1.33011.30260.94951.06581.24790.60131.40731.31231.03890.6969
DEPI 1.25121.05031.06360.96330.95121.07321.1331.01740.71811.2031
SGAI 0.99840.88421.25571.17290.7291.69832.37840.29251.13431.4415
LVGI 0.98140.89451.07960.86581.59371.03060.92691.01561.15541.0566
TATA -0.1537-0.0872-0.1798-0.0747-0.2253-0.3801-0.1895-0.1387-0.3093-0.1288
M-score -1.88-2.56-3.48-2.94-2.65-4.52-3.69-2.57-3.65-2.82

Newfield Exploration Co Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.94841.65931.45030.86961.27291.20971.30050.69770.88270.8756
GMI 1111111.30191.45431.55321.6832
AQI 1.17760.77960.83490.91641.03221.03970.85470.42470.29040.6689
SGI 1.21841.11891.03890.97540.89890.85370.80640.77640.91391.023
DEPI 0.83550.80920.71810.79250.88240.95811.20311.13161.11441.0137
SGAI 0.35460.3921.13431.16331.12311.14981.25151.35271.25931.0552
LVGI 1.00140.97531.15541.18411.1161.20321.05660.91550.92570.8394
TATA -0.1234-0.0979-0.3093-0.3297-0.2996-0.3114-0.129-0.1044-0.0961-0.0953
M-score -2.75-2.22-3.65-4.31-3.78-3.96-2.92-3.46-3.12-2.75
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