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Norfolk Southern Corp (NYSE:NSC)
Beneish M-Score
-2.78 (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.

Norfolk Southern Corp has a M-score of -2.78 suggests that the company is not a manipulator.

NSC' s Beneish M-Score Range Over the Past 10 Years
Min: -4.29   Max: 1.94
Current: -2.78

-4.29
1.94

During the past 13 years, the highest Beneish M-Score of Norfolk Southern Corp was 1.94. The lowest was -4.29. And the median was -2.62.


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 Norfolk Southern Corp 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 * 1.0323+0.528 * 0.958+0.404 * 0.931+0.892 * 0.9044+0.115 * 0.9474
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0476+4.679 * -0.0375-0.327 * 1.0194
=-2.78

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $985 Mil.
Revenue was 2454 + 2420 + 2518 + 2713 = $10,105 Mil.
Gross Profit was 1694 + 1698 + 1631 + 1799 = $6,822 Mil.
Total Current Assets was $2,239 Mil.
Total Assets was $34,334 Mil.
Property, Plant and Equipment(Net PPE) was $29,387 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,076 Mil.
Selling, General & Admin. Expense(SGA) was $2,794 Mil.
Total Current Liabilities was $2,107 Mil.
Long-Term Debt was $9,549 Mil.
Net Income was 405 + 387 + 361 + 452 = $1,605 Mil.
Non Operating Income was 4 + 16 + 24 + 39 = $83 Mil.
Cash Flow from Operations was 553 + 879 + 698 + 678 = $2,808 Mil.
Accounts Receivable was $1,055 Mil.
Revenue was 2713 + 2567 + 2870 + 3023 = $11,173 Mil.
Gross Profit was 1785 + 1634 + 1845 + 1962 = $7,226 Mil.
Total Current Assets was $2,413 Mil.
Total Assets was $33,310 Mil.
Property, Plant and Equipment(Net PPE) was $28,075 Mil.
Depreciation, Depletion and Amortization(DDA) was $972 Mil.
Selling, General & Admin. Expense(SGA) was $2,949 Mil.
Total Current Liabilities was $2,203 Mil.
Long-Term Debt was $8,890 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)
=(985 / 10105) / (1055 / 11173)
=0.0974765 / 0.09442406
=1.0323

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)
=(7226 / 11173) / (6822 / 10105)
=0.64673767 / 0.67511133
=0.958

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 - (2239 + 29387) / 34334) / (1 - (2413 + 28075) / 33310)
=0.07887225 / 0.0847193
=0.931

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
=10105 / 11173
=0.9044

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))
=(972 / (972 + 28075)) / (1076 / (1076 + 29387))
=0.03346301 / 0.03532154
=0.9474

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)
=(2794 / 10105) / (2949 / 11173)
=0.27649678 / 0.26393986
=1.0476

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)
=((9549 + 2107) / 34334) / ((8890 + 2203) / 33310)
=0.33948855 / 0.33302312
=1.0194

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
=(1605 - 83 - 2808) / 34334
=-0.0375

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.

Norfolk Southern Corp has a M-score of -2.78 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.

Norfolk Southern Corp Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.96580.94710.81711.17790.88231.07871.09810.90650.99670.9916
GMI 1.09021.0061.01680.94471.0011.03310.99510.99370.99920.98
AQI 1.0161.13570.70651.16180.97720.91730.95921.09170.9660.936
SGI 1.10321.00271.13030.74751.19411.1740.98821.01861.03370.9042
DEPI 1.06520.9770.99430.98231.04781.00110.99161.03411.00230.9469
SGAI 0.94570.79460.93051.19680.94450.93541.00720.99570.93361.1112
LVGI 0.95450.96461.03680.98170.99131.03861.08770.99580.93081.0564
TATA -0.0336-0.0351-0.0422-0.0348-0.0486-0.0515-0.0477-0.0431-0.0288-0.0416
M-score -2.49-2.59-2.84-2.70-2.63-2.51-2.67-2.71-2.57-2.85

Norfolk Southern Corp Quarterly Data

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 0.940.99910.96710.99670.90580.96241.07110.99161.03351.0323
GMI 0.99340.98140.98530.99920.98690.98770.98520.980.96620.958
AQI 1.08981.08571.1390.9661.0080.98320.950.9360.91970.931
SGI 1.01881.04751.05311.03371.02730.9770.93360.90420.90110.9044
DEPI 1.02491.00750.99951.00231.0051.01220.99010.94690.94850.9474
SGAI 0.98420.9530.94220.93360.96621.02281.06341.11121.07621.0476
LVGI 1.01611.0110.95940.93080.93570.9841.0141.05641.03431.0194
TATA -0.0379-0.0362-0.0341-0.0288-0.0321-0.0361-0.0324-0.0416-0.0471-0.0375
M-score -2.66-2.58-2.55-2.57-2.67-2.71-2.67-2.85-2.84-2.78
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