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Norfolk Southern Corp (NYSE:NSC)
Beneish M-Score
-2.67 (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 -2.67 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: -2.67

-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 * 1.0711+0.528 * 0.9852+0.404 * 0.95+0.892 * 0.9336+0.115 * 0.9901
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0634+4.679 * -0.0324-0.327 * 1.014
=-2.67

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $1,103 Mil.
Revenue was 2713 + 2713 + 2567 + 2870 = $10,863 Mil.
Gross Profit was 1799 + 1785 + 1634 + 1845 = $7,063 Mil.
Total Current Assets was $2,002 Mil.
Total Assets was $33,527 Mil.
Property, Plant and Equipment(Net PPE) was $28,682 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,011 Mil.
Selling, General & Admin. Expense(SGA) was $2,923 Mil.
Total Current Liabilities was $2,367 Mil.
Long-Term Debt was $8,896 Mil.
Net Income was 452 + 433 + 310 + 511 = $1,706 Mil.
Non Operating Income was 39 + 19 + 21 + 28 = $107 Mil.
Cash Flow from Operations was 706 + 868 + 605 + 506 = $2,685 Mil.
Accounts Receivable was $1,103 Mil.
Revenue was 3023 + 3042 + 2689 + 2881 = $11,635 Mil.
Gross Profit was 1962 + 1972 + 1644 + 1875 = $7,453 Mil.
Total Current Assets was $3,012 Mil.
Total Assets was $33,206 Mil.
Property, Plant and Equipment(Net PPE) was $27,230 Mil.
Depreciation, Depletion and Amortization(DDA) was $950 Mil.
Selling, General & Admin. Expense(SGA) was $2,944 Mil.
Total Current Liabilities was $2,082 Mil.
Long-Term Debt was $8,919 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)
=(1103 / 10863) / (1103 / 11635)
=0.10153733 / 0.09480017
=1.0711

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)
=(1785 / 11635) / (1799 / 10863)
=0.64056725 / 0.65018871
=0.9852

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 - (2002 + 28682) / 33527) / (1 - (3012 + 27230) / 33206)
=0.08479733 / 0.08926098
=0.95

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
=10863 / 11635
=0.9336

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))
=(950 / (950 + 27230)) / (1011 / (1011 + 28682))
=0.03371185 / 0.03404843
=0.9901

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)
=(2923 / 10863) / (2944 / 11635)
=0.26907852 / 0.25302965
=1.0634

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)
=((8896 + 2367) / 33527) / ((8919 + 2082) / 33206)
=0.3359382 / 0.33129555
=1.014

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
=(1706 - 107 - 2685) / 33527
=-0.0324

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 -2.67 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 0.96580.81711.17790.88231.07871.09810.90650.99670.9916
GMI 1.09021.01680.94471.0011.03310.99510.99370.99920.98
AQI 1.0160.70651.16180.97720.91730.95921.09170.9660.936
SGI 1.10321.13030.74751.19411.1740.98821.01861.03370.9042
DEPI 1.06520.99430.98231.04781.00110.99161.03411.00230.9469
SGAI 00.93051.19680.94450.93541.00720.99570.93361.1112
LVGI 0.95451.03680.98170.99131.03861.08770.99580.93081.0564
TATA -0.0336-0.0422-0.0348-0.0486-0.0515-0.0476-0.0431-0.0288-0.0416
M-score -2.33-2.84-2.70-2.63-2.51-2.67-2.71-2.57-2.85

Norfolk Southern Corp Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1.01420.90650.940.99910.96710.99670.90580.96241.07110.9916
GMI 1.00610.99370.99340.98140.98530.99920.98690.98770.98520.98
AQI 0.98211.09171.08981.08571.1390.9661.0080.98320.950.936
SGI 0.99061.01861.01881.04751.05311.03371.02730.9770.93360.9042
DEPI 1.03311.03411.02491.00750.99951.00231.0051.01220.99010.9469
SGAI 1.00920.99570.98420.9530.94220.93360.96621.02281.06341.1112
LVGI 1.00510.99581.01611.0110.95940.93080.93570.9841.0141.0564
TATA -0.0364-0.0348-0.0379-0.0362-0.0341-0.0288-0.0313-0.0353-0.0324-0.0416
M-score -2.65-2.67-2.66-2.58-2.55-2.57-2.67-2.71-2.67-2.85
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