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National Oilwell Varco Inc (NYSE:NOV)
Beneish M-Score
-2.95 (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 -2.95 suggests that the company is not a manipulator.

NOV' s 10-Year Beneish M-Score Range
Min: -3.36   Max: 1.39
Current: -2.95

-3.36
1.39

During the past 13 years, the highest Beneish M-Score of National Oilwell Varco Inc was 1.39. 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 * 0.6834+0.528 * 0.9334+0.404 * 0.9539+0.892 * 1.0183+0.115 * 0.9488
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0502+4.679 * -0.0251-0.327 * 1.0248
=-2.95

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $4,482 Mil.
Revenue was 5587 + 5255 + 5777 + 6172 = $22,791 Mil.
Gross Profit was 1528 + 1455 + 1396 + 1497 = $5,876 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 $779 Mil.
Selling, General & Admin. Expense(SGA) was $2,157 Mil.
Total Current Liabilities was $7,201 Mil.
Long-Term Debt was $2,995 Mil.
Net Income was 699 + 619 + 589 + 658 = $2,565 Mil.
Non Operating Income was 18 + 2 + 10 + -1 = $29 Mil.
Cash Flow from Operations was 519 + 871 + 488 + 1518 = $3,396 Mil.
Accounts Receivable was $6,441 Mil.
Revenue was 5789 + 5601 + 5307 + 5685 = $22,382 Mil.
Gross Profit was 1462 + 1266 + 1264 + 1394 = $5,386 Mil.
Total Current Assets was $16,255 Mil.
Total Assets was $34,673 Mil.
Property, Plant and Equipment(Net PPE) was $3,333 Mil.
Depreciation, Depletion and Amortization(DDA) was $721 Mil.
Selling, General & Admin. Expense(SGA) was $2,017 Mil.
Total Current Liabilities was $6,317 Mil.
Long-Term Debt was $3,749 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)
=(4482 / 22791) / (6441 / 22382)
=0.19665657 / 0.28777589
=0.6834

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)
=(1455 / 22382) / (1528 / 22791)
=0.2406398 / 0.25782107
=0.9334

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 - (16670 + 3377) / 34270) / (1 - (16255 + 3333) / 34673)
=0.41502772 / 0.43506475
=0.9539

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
=22791 / 22382
=1.0183

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))
=(721 / (721 + 3333)) / (779 / (779 + 3377))
=0.17784904 / 0.18743985
=0.9488

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)
=(2157 / 22791) / (2017 / 22382)
=0.09464262 / 0.09011706
=1.0502

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)
=((2995 + 7201) / 34270) / ((3749 + 6317) / 34673)
=0.2975197 / 0.29031235
=1.0248

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
=(2565 - 29 - 3396) / 34270
=-0.0251

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 -2.95 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 0.90091.53970.85851.02360.16421.26511.15173.34881.23230.7738
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 0.96030.67611.28121.01350.76860.77580.93410.99731.27881.0103
TATA -0.01890.0359-0.05470.0138-0.0189-0.02610.006-0.00610.0598-0.0314
M-score -2.49-0.59-2.66-2.18-2.70-2.37-2.38-0.15-1.66-2.64

National Oilwell Varco Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.25220.24971.23231.26653.60925.030.77380.85320.95360.6834
GMI 1.05871.10891.15181.19451.21751.16511.10971.05260.95630.9334
AQI 0.9750.98940.9511.1011.03661.0241.05350.9140.94210.9539
SGI 1.32661.37171.36721.33071.28621.20241.14111.1091.04931.0183
DEPI 1.20911.22391.05261.08431.0130.99240.96910.91770.96180.9488
SGAI 0.8430.83120.8350.90330.93810.9771.01660.98881.02971.0502
LVGI 1.19041.11741.27881.38321.21521.21371.01030.97941.02611.0248
TATA 0.04860.06820.05980.03610.0151-0.0102-0.0314-0.0282-0.0412-0.0251
M-score -2.64-2.45-1.66-1.730.321.39-2.64-2.66-2.74-2.95
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