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National Oilwell Varco Inc (NYSE:NOV)
Beneish M-Score
-2.65 (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 -2.65 suggests that the company is not a manipulator.

NOV' s Beneish M-Score Range Over the Past 10 Years
Min: -3.36   Max: 0.7
Current: -2.65

-3.36
0.7

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 -2.23.


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 * 0.8794+0.528 * 1.1282+0.404 * 1.1038+0.892 * 0.8436+0.115 * 0.9494
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1068+4.679 * 0.0016-0.327 * 1.0407
=-2.65

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $3,325 Mil.
Revenue was 3306 + 3909 + 4820 + 5709 = $17,744 Mil.
Gross Profit was 672 + 855 + 1177 + 1541 = $4,245 Mil.
Total Current Assets was $12,933 Mil.
Total Assets was $29,628 Mil.
Property, Plant and Equipment(Net PPE) was $3,122 Mil.
Depreciation, Depletion and Amortization(DDA) was $763 Mil.
Selling, General & Admin. Expense(SGA) was $1,931 Mil.
Total Current Liabilities was $5,193 Mil.
Long-Term Debt was $3,981 Mil.
Net Income was 155 + 289 + 310 + 595 = $1,349 Mil.
Non Operating Income was -20 + -23 + -47 + -62 = $-152 Mil.
Cash Flow from Operations was 410 + 194 + 114 + 736 = $1,454 Mil.
Accounts Receivable was $4,482 Mil.
Revenue was 5587 + 5255 + 4889 + 5302 = $21,033 Mil.
Gross Profit was 1528 + 1455 + 1290 + 1404 = $5,677 Mil.
Total Current Assets was $16,670 Mil.
Total Assets was $34,270 Mil.
Property, Plant and Equipment(Net PPE) was $3,377 Mil.
Depreciation, Depletion and Amortization(DDA) was $774 Mil.
Selling, General & Admin. Expense(SGA) was $2,068 Mil.
Total Current Liabilities was $7,201 Mil.
Long-Term Debt was $2,995 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)
=(3325 / 17744) / (4482 / 21033)
=0.18738729 / 0.21309371
=0.8794

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)
=(855 / 21033) / (672 / 17744)
=0.26990919 / 0.2392358
=1.1282

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 - (12933 + 3122) / 29628) / (1 - (16670 + 3377) / 34270)
=0.45811395 / 0.41502772
=1.1038

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
=17744 / 21033
=0.8436

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))
=(774 / (774 + 3377)) / (763 / (763 + 3122))
=0.18646109 / 0.1963964
=0.9494

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)
=(1931 / 17744) / (2068 / 21033)
=0.10882552 / 0.09832168
=1.1068

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)
=((3981 + 5193) / 29628) / ((2995 + 7201) / 34270)
=0.30963953 / 0.2975197
=1.0407

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
=(1349 - -152 - 1454) / 29628
=0.0016

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 -2.65 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.85851.02360.16421.26511.15173.95220.94821.01380.8086
GMI 0.84820.86670.95361.01850.94431.02751.0461.10450.9801
AQI 0.80090.81621.72160.99290.98750.92750.9511.05350.972
SGI 1.51271.39331.37210.94650.95631.20581.1731.11791.1154
DEPI 0.85060.89520.78450.91790.97521.16771.06950.97180.9472
SGAI 0.8860.8791.07031.21041.09560.93410.90391.03030.9845
LVGI 1.28121.01350.76860.82810.87520.99731.27881.01031.0965
TATA -0.05470.0138-0.0189-0.02610.006-0.00610.0597-0.0314-0.0024
M-score -2.66-2.18-2.70-2.39-2.360.41-2.16-2.44-2.62

National Oilwell Varco Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1.44771.12711.0091.03430.67940.84780.69980.79630.87940.9627
GMI 1.10911.0320.95710.91360.93660.95170.99291.06491.12821.2412
AQI 1.0241.05350.9140.94210.95390.9721.02621.03991.10381.0556
SGI 1.10311.00550.93770.96751.02431.06391.0830.9860.84360.6883
DEPI 1.02050.97180.92420.94770.92760.94720.92560.94090.94941.2288
SGAI 1.02421.08551.07651.06931.04071.01391.06321.05671.10681.2374
LVGI 1.21371.01030.97941.02611.02481.09651.14911.05781.04070.9885
TATA -0.0102-0.0315-0.0283-0.0413-0.0252-0.00240.00220.01420.0016-0.0515
M-score -2.03-2.49-2.73-2.77-2.95-2.65-2.73-2.60-2.65-2.89
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