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Novagold Resources Inc (AMEX:NG)
Beneish M-Score
3.06 (As of Today)

Warning Sign:

Beneish M-Score 3.06 higher than -2.22, which implies that it might have manipulated its financial results.

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.

Novagold Resources Inc has a M-score of signals that the company is a manipulator.

NG' s 10-Year Beneish M-Score Range
Min: -5.92   Max: 10.88
Current: 3.06

-5.92
10.88

During the past 13 years, the highest Beneish M-Score of Novagold Resources Inc was 10.88. The lowest was -5.92. And the median was -0.97.


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 Novagold Resources Inc 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 * +0.528 * +0.404 * +0.892 * +0.115 *
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * +4.679 * -0.327 *
=

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

This Year (Aug14) TTM:Last Year (Aug13) TTM:
Accounts Receivable was $0.00 Mil.
Revenue was 0 + 0 + 0 + 0 = $0.00 Mil.
Gross Profit was 0 + 0 + 0 + 0 = $0.00 Mil.
Total Current Assets was $174.15 Mil.
Total Assets was $546.26 Mil.
Property, Plant and Equipment(Net PPE) was $53.55 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.04 Mil.
Selling, General & Admin. Expense(SGA) was $24.14 Mil.
Total Current Liabilities was $18.47 Mil.
Long-Term Debt was $75.17 Mil.
Net Income was -12.009 + -10.681 + -10.691 + -19.189 = $-52.57 Mil.
Non Operating Income was 0.173 + -0.961 + 2.334 + 2.002 = $3.55 Mil.
Cash Flow from Operations was -1.673 + -0.474 + -5.214 + -5.195 = $-12.56 Mil.
Accounts Receivable was $ Mil.
Revenue was 0 + 0 + 0 + 0 = $ Mil.
Gross Profit was + + + = $ Mil.
Total Current Assets was $ Mil.
Total Assets was $ Mil.
Property, Plant and Equipment(Net PPE) was $ Mil.
Depreciation, Depletion and Amortization(DDA) was $ Mil.
Selling, General & Admin. Expense(SGA) was $ Mil.
Total Current Liabilities was $ Mil.
Long-Term Debt was $ 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)
=(0 / 0) / ( / 0)
= /
=

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)
=(0 / 0) / (0 / 0)
= /
=

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 - (174.147 + 53.552) / 546.26) / (1 - ( + 55.282) / )
=0.58316736 /
=

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
=0 / 0
=

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))
=(-0.135 / (-0.135 + 55.282)) / (0.035 / (0.035 + 53.552))
= / 0.00065314
=

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)
=(24.137 / 0) / ( / 0)
= /
=

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)
=((75.165 + 18.471) / 546.26) / (( + ) / )
=0.17141288 /
=

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
=(-52.57 - 3.548 - -12.556) / 546.26
=-0.0797

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.

Novagold Resources Inc has a M-score of signals that the company is likely to 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.

Novagold Resources Inc Annual Data

Nov04Nov05Nov06Nov07Nov08Nov09Nov10Nov11Nov12Nov13
DSRI 1.45143.75070.63534.00310.31761.50562.1935111
GMI 0.85571.04650.90650.9981.00681.2471-0.0376111
AQI 2.58141.75512.05681.95320.64130.89030.633828.506818.009118.9904
SGI 2.57670.99812.3070.97240.50110.31880.5204000
DEPI 2.9151.46441.69481.82360.78181.07790.42840.00550.48741.2693
SGAI 0.93450.97141.52553.43290.210916.32230.5786111
LVGI 0.6190.98711.89291.52952.31770.69411.19571.61141.27410.7447
TATA -0.02560.0001-0.0470.01320.0072-0.0229-0.0062-0.1141-0.0542-0.0896
M-score 0.140.44-1.790.21-3.98-5.17-2.596.893.103.59

Novagold Resources Inc Quarterly Data

May12Aug12Nov12Feb13May13Aug13Nov13Feb14May14Aug14
DSRI 1111111111
GMI 1111111111
AQI 17.230618.091216.75717.505819.926917.044917.670217.714918.099218.2325
SGI 0000000000
DEPI 0.00160.00190.3310.00060.0006-0.22840.82880.79490.83460.856
SGAI 1111111111
LVGI 2.21022.17822.25952.07261.29241.36821.32061.37941.40031.4612
TATA -0.1022-0.0387-0.5262-0.531-0.6141-0.6816-0.0896-0.0851-0.0868-0.0797
M-score 2.202.850.040.351.19-0.342.822.832.983.05
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