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National Oilwell Varco Inc (NYSE:NOV)
Beneish M-Score
-2.63 (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 -2.63 suggests that the company is not a manipulator.

NOV' s 10-Year Beneish M-Score Range
Min: -2.93   Max: 0.41
Current: -2.63

-2.93
0.41

During the past 13 years, the highest Beneish M-Score of National Oilwell Varco Inc was 0.41. The lowest was -2.93. And the median was -2.34.


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 * 0.8141+0.528 * 0.9734+0.404 * 0.972+0.892 * 1.108+0.115 * 0.9472
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.994+4.679 * -0.0024-0.327 * 1.0965
=-2.63

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
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.
Net Income was 595 + 699 + 619 + 589 = $2,502 Mil.
Non Operating Income was -62 + 18 + 2 + 10 = $-32 Mil.
Cash Flow from Operations was 736 + 519 + 871 + 488 = $2,614 Mil.
Accounts Receivable was $4,896 Mil.
Revenue was 5302 + 4863 + 4680 + 5307 = $20,152 Mil.
Gross Profit was 1404 + 1360 + 1173 + 1264 = $5,201 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 $738 Mil.
Selling, General & Admin. Expense(SGA) was $1,944 Mil.
Total Current Liabilities was $6,678 Mil.
Long-Term Debt was $3,149 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)
=(4416 / 22328) / (4896 / 20152)
=0.19777857 / 0.24295355
=0.8141

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)
=(1528 / 20152) / (1541 / 22328)
=0.25808853 / 0.26513794
=0.9734

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 - (16162 + 3362) / 33562) / (1 - (16423 + 3408) / 34812)
=0.41827066 / 0.43034011
=0.972

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
=22328 / 20152
=1.108

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))
=(738 / (738 + 3408)) / (778 / (778 + 3362))
=0.17800289 / 0.18792271
=0.9472

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)
=(2141 / 22328) / (1944 / 20152)
=0.09588857 / 0.09646685
=0.994

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)
=((3014 + 7374) / 33562) / ((3149 + 6678) / 34812)
=0.30951672 / 0.28228772
=1.0965

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
=(2502 - -32 - 2614) / 33562
=-0.0024

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 -2.63 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.53970.85851.02360.16421.26511.15173.95220.81351.18170.8086
GMI 1.02250.84820.86670.95361.01850.94431.02751.15161.00320.9801
AQI 1.34120.80090.81621.72160.99290.98750.92750.9511.05350.972
SGI 2.00361.51271.39331.37210.94650.95631.20581.36720.95911.1154
DEPI 1.27370.85060.89520.78450.91790.97521.16771.05260.98740.9472
SGAI 0.72890.8860.8791.07031.21041.09560.93410.83551.11460.9845
LVGI 0.67611.28121.01350.76860.82810.87520.99731.27881.01031.0965
TATA 0.0359-0.05470.0138-0.0189-0.02610.006-0.00610.0598-0.0314-0.0024
M-score -0.59-2.66-2.18-2.70-2.39-2.360.41-2.04-2.50-2.62

National Oilwell Varco Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.24970.81351.26653.76755.48241.12710.96560.9910.65190.8141
GMI 1.10891.15181.19451.18721.10911.0320.98030.93550.95820.9734
AQI 0.98940.9511.1011.03661.0241.05350.9140.94210.95390.972
SGI 1.37171.36721.33071.23221.10311.00550.97991.00981.06751.108
DEPI 1.22391.05261.08431.02281.00630.98740.93450.96180.94070.9472
SGAI 0.83120.8350.90330.96091.02421.08551.05371.0471.01980.994
LVGI 1.11741.27881.38321.21521.21371.01030.97941.02611.02481.0965
TATA 0.06820.05980.03610.0152-0.0102-0.0315-0.0283-0.0413-0.0252-0.0024
M-score -2.45-2.04-1.730.401.68-2.49-2.72-2.75-2.92-2.63
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