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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 National Oilwell Varco Inc was 0.70. The lowest was -3.36. And the median was -2.22.
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 National Oilwell Varco 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 * 1.0025||+||0.528 * 1.2654||+||0.404 * 1.0556||+||0.892 * 0.6609||+||0.115 * 0.9738|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2671||+||4.679 * -0.0745||-||0.327 * 0.9885|
|This Year (Dec15) TTM:||Last Year (Dec14) TTM:|
|Accounts Receivable was $2,926 Mil.|
Revenue was 2722 + 3306 + 3909 + 4820 = $14,757 Mil.
Gross Profit was 388 + 672 + 855 + 1177 = $3,092 Mil.
Total Current Assets was $11,801 Mil.
Total Assets was $26,725 Mil.
Property, Plant and Equipment(Net PPE) was $3,124 Mil.
Depreciation, Depletion and Amortization(DDA) was $747 Mil.
Selling, General & Admin. Expense(SGA) was $1,793 Mil.
Total Current Liabilities was $4,249 Mil.
Long-Term Debt was $3,928 Mil.
Net Income was -1523 + 155 + 289 + 310 = $-769 Mil.
Non Operating Income was -20 + -20 + -23 + -47 = $-110 Mil.
Cash Flow from Operations was 614 + 410 + 194 + 114 = $1,332 Mil.
|Accounts Receivable was $4,416 Mil.
Revenue was 5709 + 5587 + 5255 + 5777 = $22,328 Mil.
Gross Profit was 1541 + 1528 + 1455 + 1396 = $5,920 Mil.
Total Current Assets was $16,162 Mil.
Total Assets was $33,562 Mil.
Property, Plant and Equipment(Net PPE) was $3,362 Mil.
Depreciation, Depletion and Amortization(DDA) was $778 Mil.
Selling, General & Admin. Expense(SGA) was $2,141 Mil.
Total Current Liabilities was $7,374 Mil.
Long-Term Debt was $3,014 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)|
|=||(2926 / 14757)||/||(4416 / 22328)|
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)|
|=||(672 / 22328)||/||(388 / 14757)|
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 - (11801 + 3124) / 26725)||/||(1 - (16162 + 3362) / 33562)|
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))|
|=||(778 / (778 + 3362))||/||(747 / (747 + 3124))|
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)|
|=||(1793 / 14757)||/||(2141 / 22328)|
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)|
|=||((3928 + 4249) / 26725)||/||((3014 + 7374) / 33562)|
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|
|=||(-769 - -110||-||1332)||/||26725|
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.
National Oilwell Varco Inc has a M-score of -3.01 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
National Oilwell Varco Inc Annual Data
National Oilwell Varco Inc Quarterly Data