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National Oilwell Varco Inc (NYSE:NOV)
Beneish M-Score
-2.44 (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.

National Oilwell Varco Inc has a M-score of -2.44 suggests that the company is not a manipulator.

NOV' s 10-Year Beneish M-Score Range
Min: -2.93   Max: -1.05
Current: -2.44

-2.93
-1.05

During the past 13 years, the highest Beneish M-Score of National Oilwell Varco Inc was -1.05. The lowest was -2.93. And the median was -2.26.


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 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 * 0.9932+0.528 * 1.1097+0.404 * 1.0535+0.892 * 1.1411+0.115 * 0.9691
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0166+4.679 * -0.0314-0.327 * 1.0103
=-2.44

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $4,896 Mil.
Revenue was 6172 + 5789 + 5601 + 5307 = $22,869 Mil.
Gross Profit was 1497 + 1462 + 1266 + 1264 = $5,489 Mil.
Total Current Assets was $16,423 Mil.
Total Assets was $34,812 Mil.
Property, Plant and Equipment(Net PPE) was $3,408 Mil.
Depreciation, Depletion and Amortization(DDA) was $755 Mil.
Selling, General & Admin. Expense(SGA) was $2,066 Mil.
Total Current Liabilities was $6,678 Mil.
Long-Term Debt was $3,149 Mil.
Net Income was 658 + 636 + 531 + 502 = $2,327 Mil.
Non Operating Income was -1 + -3 + 28 + -2 = $22 Mil.
Cash Flow from Operations was 1518 + 1009 + 364 + 506 = $3,397 Mil.
Accounts Receivable was $4,320 Mil.
Revenue was 5685 + 5319 + 4734 + 4303 = $20,041 Mil.
Gross Profit was 1394 + 1371 + 1306 + 1267 = $5,338 Mil.
Total Current Assets was $15,678 Mil.
Total Assets was $31,484 Mil.
Property, Plant and Equipment(Net PPE) was $2,945 Mil.
Depreciation, Depletion and Amortization(DDA) was $628 Mil.
Selling, General & Admin. Expense(SGA) was $1,781 Mil.
Total Current Liabilities was $5,649 Mil.
Long-Term Debt was $3,148 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)
=(4896 / 22869) / (4320 / 20041)
=0.21408894 / 0.21555811
=0.9932

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)
=(1462 / 20041) / (1497 / 22869)
=0.26635397 / 0.24001924
=1.1097

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 - (16423 + 3408) / 34812) / (1 - (15678 + 2945) / 31484)
=0.43034011 / 0.4084932
=1.0535

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
=22869 / 20041
=1.1411

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))
=(628 / (628 + 2945)) / (755 / (755 + 3408))
=0.17576266 / 0.1813596
=0.9691

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)
=(2066 / 22869) / (1781 / 20041)
=0.09034064 / 0.08886782
=1.0166

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)
=((3149 + 6678) / 34812) / ((3148 + 5649) / 31484)
=0.28228772 / 0.27941176
=1.0103

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
=(2327 - 22 - 3397) / 34812
=-0.0314

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 -2.44 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.

National Oilwell Varco Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.32591.04620.85851.02360.99740.82381.15760.99410.81350.9932
GMI 1.0771.02250.84820.86670.95361.01850.94431.02751.15161.1099
AQI 0.94331.34120.80090.81621.72160.99290.98750.92750.9511.0535
SGI 1.15622.00361.51271.39331.37210.94650.95631.20581.36721.1411
DEPI 0.91391.27370.85060.89520.78450.91790.97521.16771.05260.9691
SGAI 0.92890.72890.8860.8791.07031.21041.09560.93410.83551.016
LVGI 0.96030.67611.28121.01350.76860.82810.87520.99731.27881.0103
TATA -0.01890.0359-0.05470.0138-0.0189-0.02610.006-0.00610.0598-0.0314
M-score -2.10-1.04-2.66-2.18-1.93-2.79-2.36-2.31-2.04-2.44

National Oilwell Varco Inc Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 1.15290.99410.93711.02130.94570.81351.26650.89111.32830.9932
GMI 1.01241.02751.03481.05871.10891.15181.19451.21751.16511.1097
AQI 0.94540.92750.91130.9750.98940.9511.1011.03661.0241.0535
SGI 1.11991.20581.28891.32661.37171.36721.33071.28621.20241.1411
DEPI 1.00911.16771.18261.20911.22391.05261.08431.0130.99240.9691
SGAI 0.95920.93410.86180.8430.83120.8350.90330.93810.9771.0166
LVGI 1.08450.99731.0631.19041.11741.27881.38321.21521.21371.0103
TATA -0.0197-0.00610.00290.04860.06820.05980.03610.0151-0.0102-0.0314
M-score -2.36-2.31-2.26-1.93-1.81-2.04-1.73-2.18-2.02-2.44
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