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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 -2.24.
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 * 0.9688||+||0.528 * 1.4983||+||0.404 * 1.0739||+||0.892 * 0.5674||+||0.115 * 1.0726|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.2894||+||4.679 * -0.1191||-||0.327 * 0.8286|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $2,212 Mil.|
Revenue was 2189 + 2722 + 3306 + 3909 = $12,126 Mil.
Gross Profit was 244 + 388 + 672 + 855 = $2,159 Mil.
Total Current Assets was $10,048 Mil.
Total Assets was $24,754 Mil.
Property, Plant and Equipment(Net PPE) was $3,303 Mil.
Depreciation, Depletion and Amortization(DDA) was $732 Mil.
Selling, General & Admin. Expense(SGA) was $1,619 Mil.
Total Current Liabilities was $3,435 Mil.
Long-Term Debt was $3,372 Mil.
Net Income was -119 + -1523 + 155 + 289 = $-1,198 Mil.
Non Operating Income was -27 + -20 + -20 + -23 = $-90 Mil.
Cash Flow from Operations was 621 + 614 + 410 + 194 = $1,839 Mil.
|Accounts Receivable was $4,024 Mil.
Revenue was 4820 + 5709 + 5587 + 5255 = $21,371 Mil.
Gross Profit was 1177 + 1541 + 1528 + 1455 = $5,701 Mil.
Total Current Assets was $15,299 Mil.
Total Assets was $32,424 Mil.
Property, Plant and Equipment(Net PPE) was $3,216 Mil.
Depreciation, Depletion and Amortization(DDA) was $777 Mil.
Selling, General & Admin. Expense(SGA) was $2,213 Mil.
Total Current Liabilities was $6,667 Mil.
Long-Term Debt was $4,094 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)|
|=||(2212 / 12126)||/||(4024 / 21371)|
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)|
|=||(5701 / 21371)||/||(2159 / 12126)|
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 - (10048 + 3303) / 24754)||/||(1 - (15299 + 3216) / 32424)|
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))|
|=||(777 / (777 + 3216))||/||(732 / (732 + 3303))|
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)|
|=||(1619 / 12126)||/||(2213 / 21371)|
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)|
|=||((3372 + 3435) / 24754)||/||((4094 + 6667) / 32424)|
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|
|=||(-1198 - -90||-||1839)||/||24754|
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 -3.14 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