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Norfolk Southern Corp (NYSE:NSC)
Beneish M-Score
-2.57 (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 -2.57 suggests that the company is not a manipulator.

NSC' s 10-Year Beneish M-Score Range
Min: -4.29   Max: 1.94
Current: -2.57

-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 -2.61.


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 * 0.9991+0.528 * 0.9814+0.404 * 1.0857+0.892 * 1.0475+0.115 * 1.0075
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9552+4.679 * -0.0347-0.327 * 1.011
=-2.57

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $1,122 Mil.
Revenue was 3042 + 2689 + 2881 + 2824 = $11,436 Mil.
Gross Profit was 1972 + 1644 + 1875 + 1814 = $7,305 Mil.
Total Current Assets was $3,266 Mil.
Total Assets was $33,040 Mil.
Property, Plant and Equipment(Net PPE) was $26,927 Mil.
Depreciation, Depletion and Amortization(DDA) was $944 Mil.
Selling, General & Admin. Expense(SGA) was $4,583 Mil.
Total Current Liabilities was $2,368 Mil.
Long-Term Debt was $8,814 Mil.
Net Income was 562 + 368 + 513 + 482 = $1,925 Mil.
Non Operating Income was 18 + -26 + 39 + 30 = $61 Mil.
Cash Flow from Operations was 849 + 588 + 674 + 898 = $3,009 Mil.
Accounts Receivable was $1,072 Mil.
Revenue was 2802 + 2738 + 2684 + 2693 = $10,917 Mil.
Gross Profit was 1788 + 1698 + 1673 + 1685 = $6,844 Mil.
Total Current Assets was $2,078 Mil.
Total Assets was $30,605 Mil.
Property, Plant and Equipment(Net PPE) was $26,098 Mil.
Depreciation, Depletion and Amortization(DDA) was $922 Mil.
Selling, General & Admin. Expense(SGA) was $4,580 Mil.
Total Current Liabilities was $1,815 Mil.
Long-Term Debt was $8,430 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)
=(1122 / 11436) / (1072 / 10917)
=0.09811123 / 0.09819547
=0.9991

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)
=(1644 / 10917) / (1972 / 11436)
=0.62691216 / 0.6387723
=0.9814

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 - (3266 + 26927) / 33040) / (1 - (2078 + 26098) / 30605)
=0.08616828 / 0.07936612
=1.0857

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
=11436 / 10917
=1.0475

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))
=(922 / (922 + 26098)) / (944 / (944 + 26927))
=0.03412287 / 0.03387033
=1.0075

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)
=(4583 / 11436) / (4580 / 10917)
=0.40075201 / 0.41952917
=0.9552

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)
=((8814 + 2368) / 33040) / ((8430 + 1815) / 30605)
=0.33843826 / 0.33474922
=1.011

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
=(1925 - 61 - 3009) / 33040
=-0.0347

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 -2.57 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.97621.04090.96580.81711.17790.88231.07871.09810.9065
GMI 0.97020.98331.09021.01680.94471.0011.03310.99510.9937
AQI 0.25411.04911.0160.70651.16180.97720.91730.95921.0917
SGI 1.13051.16621.10321.13030.74751.19411.1740.98821.0186
DEPI 1.48890.7881.06520.99430.98231.04781.00110.99161.0341
SGAI 0.87270.961600.93051.19680.94450.93541.5530.9962
LVGI 0.8770.90150.95451.03680.98170.99131.03861.08770.9958
TATA -0.0334-0.0347-0.0336-0.0422-0.0348-0.0486-0.0515-0.0476-0.0431
M-score -2.74-2.43-2.33-2.84-2.70-2.63-2.51-2.77-2.71

Norfolk Southern Corp Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.98680.99791.01141.09811.13171.02621.01420.90650.940.9991
GMI 1.0020.98570.99490.99511.00871.02431.00610.99370.99340.9814
AQI 0.90340.91570.90070.95920.98710.99050.98211.09171.08981.0857
SGI 1.14581.09821.03590.98820.9690.96190.99061.01861.01881.0475
DEPI 0.9950.99160.98910.99160.99971.01631.03311.03411.02491.0075
SGAI 0.94230.95441.12261.28661.43621.59771.37991.20251.08090.9552
LVGI 1.15271.09491.11571.08771.00111.00261.00510.99581.01611.011
TATA -0.0603-0.0473-0.0421-0.0476-0.0304-0.0373-0.0364-0.0348-0.0363-0.0347
M-score -2.72-2.68-2.74-2.72-2.60-2.76-2.71-2.71-2.67-2.57
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