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National Oilwell Varco Inc (NYSE:NOV)
Beneish M-Score
-2.61 (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 -2.61 suggests that the company is not a manipulator.

NOV' s 10-Year Beneish M-Score Range
Min: -3.35   Max: 1.36
Current: -2.61

-3.35
1.36

During the past 13 years, the highest Beneish M-Score of National Oilwell Varco Inc was 1.36. The lowest was -3.35. And the median was -2.22.


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 * 0.825+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
=-2.61

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

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

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)
=(5310 / 24136) / (5612 / 21045)
=0.22000331 / 0.26666667
=0.825

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)
=(1500 / 21045) / (1400 / 24136)
=0.25797101 / 0.23098276
=1.1168

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 - (17211 + 3437) / 35480) / (1 - (14994 + 3215) / 33607)
=0.41803833 / 0.45817836
=0.9124

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
=24136 / 21045
=1.1469

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))
=0.16903593 / 0.18419179
=0.9177

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)
=0.08543255 / 0.08928487
=0.9569

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)
=0.2888106 / 0.29717023
=0.9719

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
=(2414 - 35 - 3379) / 35480
=-0.0282

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.


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 0.90091.53970.85851.02360.16421.26511.15173.34880.96010.9497
GMI 1.0771.02250.84820.86670.95361.01610.94211.0231.14621.1826
AQI 0.94331.34120.80090.81621.72160.99290.98750.92750.9511.0535
SGI 1.15622.00361.51271.39331.37210.94650.95631.20581.36721.1933
DEPI 0.91391.27370.85060.89520.78450.91790.97521.16771.05260.9691
SGAI 0.92890.72890.8860.8791.07031.1391.20210.90470.80880.9687
LVGI 0.96030.67611.28121.01350.76860.77580.85071.09511.27881.0103
TATA -0.01890.0359-0.05470.0138-0.0189-0.02610.0048-0.00610.0595-0.0316
M-score -2.49-0.59-2.66-2.18-2.70-2.36-2.38-0.18-1.91-2.39

National Oilwell Varco Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 3.47250.21460.24970.81351.26654.73094.92420.95970.8250.7114
GMI 1.03851.06011.1041.14321.17731.20861.20671.17031.11681.0072
AQI 0.91130.9750.98940.9511.10291.03661.0241.05350.91240.9421
SGI 1.28891.32661.37171.36721.33071.30241.22821.18091.14691.0598
DEPI 1.18261.20911.22391.05261.08431.02280.99240.96910.91770.9446
SGAI 0.86440.83870.82440.8120.88750.92280.95431.01060.95691.0014
LVGI 1.0631.19041.11741.27881.3941.21521.21371.01030.97191.0261
TATA 0.00270.04850.06790.05950.03560.0146-0.0104-0.0316-0.0282-0.0412
M-score 0.07-2.67-2.45-2.04-1.741.361.34-2.40-2.61-2.92
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