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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 -2.44 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of National Oilwell Varco Inc was -1.05. The lowest was -2.93. And the median was -2.26.
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 * 0.9932||+||0.528 * 1.1097||+||0.404 * 1.0535||+||0.892 * 1.1411||+||0.115 * 0.9691|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0166||+||4.679 * -0.0314||-||0.327 * 1.0103|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was $4,896 Mil.|
Revenue was 6172 + 5789 + 5601 + 5307 = $22,869 Mil.
Gross Profit was 1497 + 1462 + 1266 + 1264 = $5,489 Mil.
Total Current Assets was $16,423 Mil.
Total Assets was $34,812 Mil.
Property, Plant and Equipment(Net PPE) was $3,408 Mil.
Depreciation, Depletion and Amortization(DDA) was $755 Mil.
Selling, General & Admin. Expense(SGA) was $2,066 Mil.
Total Current Liabilities was $6,678 Mil.
Long-Term Debt was $3,149 Mil.
Net Income was 658 + 636 + 531 + 502 = $2,327 Mil.
Non Operating Income was -1 + -3 + 28 + -2 = $22 Mil.
Cash Flow from Operations was 1518 + 1009 + 364 + 506 = $3,397 Mil.
|Accounts Receivable was $4,320 Mil.
Revenue was 5685 + 5319 + 4734 + 4303 = $20,041 Mil.
Gross Profit was 1394 + 1371 + 1306 + 1267 = $5,338 Mil.
Total Current Assets was $15,678 Mil.
Total Assets was $31,484 Mil.
Property, Plant and Equipment(Net PPE) was $2,945 Mil.
Depreciation, Depletion and Amortization(DDA) was $628 Mil.
Selling, General & Admin. Expense(SGA) was $1,781 Mil.
Total Current Liabilities was $5,649 Mil.
Long-Term Debt was $3,148 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)|
|=||(4896 / 22869)||/||(4320 / 20041)|
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)|
|=||(1462 / 20041)||/||(1497 / 22869)|
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 - (16423 + 3408) / 34812)||/||(1 - (15678 + 2945) / 31484)|
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))|
|=||(628 / (628 + 2945))||/||(755 / (755 + 3408))|
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)|
|=||(2066 / 22869)||/||(1781 / 20041)|
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 + 6678) / 34812)||/||((3148 + 5649) / 31484)|
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|
|=||(2327 - 22||-||3397)||/||34812|
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 -2.44 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