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National Oilwell Varco Inc (NYSE:NOV)
Beneish M-Score
-2.73 (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 -2.73 suggests that the company is not a manipulator.

NOV' s 10-Year Beneish M-Score Range
Min: -3.36   Max: 1.68
Current: -2.73

-3.36
1.68

During the past 13 years, the highest Beneish M-Score of National Oilwell Varco Inc was 1.68. The lowest was -3.36. And the median was -2.24.


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 * 0.6998+0.528 * 0.9929+0.404 * 1.0262+0.892 * 1.083+0.115 * 0.9256
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0632+4.679 * 0.0022-0.327 * 1.1491
=-2.73

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
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.
Net Income was 310 + 595 + 699 + 619 = $2,223 Mil.
Non Operating Income was -47 + -62 + 18 + 2 = $-89 Mil.
Cash Flow from Operations was 114 + 736 + 519 + 871 = $2,240 Mil.
Accounts Receivable was $5,310 Mil.
Revenue was 4889 + 5302 + 4863 + 4680 = $19,734 Mil.
Gross Profit was 1290 + 1404 + 1360 + 1173 = $5,227 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 $755 Mil.
Selling, General & Admin. Expense(SGA) was $1,922 Mil.
Total Current Liabilities was $7,098 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)
=(4024 / 21371) / (5310 / 19734)
=0.18829255 / 0.26907875
=0.6998

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)
=(1541 / 19734) / (1177 / 21371)
=0.26487281 / 0.26676337
=0.9929

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 - (15299 + 3216) / 32424) / (1 - (17211 + 3437) / 35480)
=0.42897237 / 0.41803833
=1.0262

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
=21371 / 19734
=1.083

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))
=(755 / (755 + 3437)) / (777 / (777 + 3216))
=0.18010496 / 0.19459053
=0.9256

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)
=(2213 / 21371) / (1922 / 19734)
=0.10355154 / 0.09739536
=1.0632

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)
=((4094 + 6667) / 32424) / ((3149 + 7098) / 35480)
=0.33188379 / 0.2888106
=1.1491

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
=(2223 - -89 - 2240) / 32424
=0.0022

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 -2.73 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

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 0.81351.26653.76755.48241.12711.0091.03430.67940.84780.6998
GMI 1.15181.19451.18721.10911.0320.95710.91360.93660.95170.9929
AQI 0.9511.1011.03661.0241.05350.9140.94210.95390.9721.0262
SGI 1.36721.33071.23221.10311.00550.93770.96751.02431.06391.083
DEPI 1.05261.08431.02281.00630.98740.93850.96180.94070.94720.9256
SGAI 0.8350.90330.96091.02421.08551.07651.06931.04071.01391.0632
LVGI 1.27881.38321.21521.21371.01030.97941.02611.02481.09651.1491
TATA 0.05980.03610.0152-0.0102-0.0315-0.0283-0.0413-0.0252-0.00240.0022
M-score -2.04-1.730.401.68-2.49-2.73-2.76-2.95-2.65-2.73
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