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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.
National Oilwell Varco Inc has a M-score of -2.61 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of National Oilwell Varco Inc was -0.71. The lowest was -2.93. 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 * 0.825||+||0.528 * 1.1168||+||0.404 * 0.9124||+||0.892 * 1.1469||+||0.115 * 0.9177|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9569||+||4.679 * -0.0282||-||0.327 * 0.9719|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $5,310 Mil.|
Revenue was 5777 + 6488 + 5994 + 5877 = $24,136 Mil.
Gross Profit was 1400 + 1500 + 1355 + 1320 = $5,575 Mil.
Total Current Assets was $17,211 Mil.
Total Assets was $35,480 Mil.
Property, Plant and Equipment(Net PPE) was $3,437 Mil.
Depreciation, Depletion and Amortization(DDA) was $776 Mil.
Selling, General & Admin. Expense(SGA) was $2,062 Mil.
Total Current Liabilities was $7,098 Mil.
Long-Term Debt was $3,149 Mil.
Net Income was 589 + 658 + 636 + 531 = $2,414 Mil.
Non Operating Income was 10 + -1 + -2 + 28 = $35 Mil.
Cash Flow from Operations was 488 + 1518 + 1009 + 364 = $3,379 Mil.
|Accounts Receivable was $5,612 Mil.
Revenue was 5307 + 5685 + 5319 + 4734 = $21,045 Mil.
Gross Profit was 1287 + 1410 + 1411 + 1321 = $5,429 Mil.
Total Current Assets was $14,994 Mil.
Total Assets was $33,607 Mil.
Property, Plant and Equipment(Net PPE) was $3,215 Mil.
Depreciation, Depletion and Amortization(DDA) was $654 Mil.
Selling, General & Admin. Expense(SGA) was $1,879 Mil.
Total Current Liabilities was $5,638 Mil.
Long-Term Debt was $4,349 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)|
|=||(5310 / 24136)||/||(5612 / 21045)|
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)|
|=||(1500 / 21045)||/||(1400 / 24136)|
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 - (17211 + 3437) / 35480)||/||(1 - (14994 + 3215) / 33607)|
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))|
|=||(654 / (654 + 3215))||/||(776 / (776 + 3437))|
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)|
|=||(2062 / 24136)||/||(1879 / 21045)|
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 + 7098) / 35480)||/||((4349 + 5638) / 33607)|
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|
|=||(2414 - 35||-||3379)||/||35480|
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 -2.61 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