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Norfolk Southern Corporation (NYSE:NSC)
Beneish M-Score
-2.71 (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 Corporation has a M-score of -2.71 suggests that the company is not a manipulator.

NSC' s 10-Year Beneish M-Score Range
Min: -3.15   Max: 0.83
Current: -2.71

-3.15
0.83

During the past 13 years, the highest Beneish M-Score of Norfolk Southern Corporation was 0.83. The lowest was -3.15. And the median was -2.56.


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 Corporation 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 * 0.9065+0.528 * 0.9937+0.404 * 1.0917+0.892 * 1.0186+0.115 * 1.0341
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.994+4.679 * -0.0431-0.327 * 0.9958
=-2.71

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

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $1,024 Mil.
Revenue was 2881 + 2824 + 2802 + 2738 = $11,245 Mil.
Gross Profit was 1875 + 1814 + 1788 + 1698 = $7,175 Mil.
Total Current Assets was $3,075 Mil.
Total Assets was $32,483 Mil.
Property, Plant and Equipment(Net PPE) was $26,645 Mil.
Depreciation, Depletion and Amortization(DDA) was $922 Mil.
Selling, General & Admin. Expense(SGA) was $3,828 Mil.
Total Current Liabilities was $2,305 Mil.
Long-Term Debt was $8,903 Mil.
Net Income was 513 + 482 + 465 + 450 = $1,910 Mil.
Non Operating Income was 39 + 30 + 29 + 135 = $233 Mil.
Cash Flow from Operations was 674 + 898 + 783 + 723 = $3,078 Mil.
Accounts Receivable was $1,109 Mil.
Revenue was 2684 + 2693 + 2874 + 2789 = $11,040 Mil.
Gross Profit was 1673 + 1685 + 1887 + 1755 = $7,000 Mil.
Total Current Assets was $2,242 Mil.
Total Assets was $30,342 Mil.
Property, Plant and Equipment(Net PPE) was $25,736 Mil.
Depreciation, Depletion and Amortization(DDA) was $922 Mil.
Selling, General & Admin. Expense(SGA) was $3,781 Mil.
Total Current Liabilities was $2,081 Mil.
Long-Term Debt was $8,432 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)
=(1024 / 11245) / (1109 / 11040)
=0.09106269 / 0.1004529
=0.9065

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)
=(1814 / 11040) / (1875 / 11245)
=0.63405797 / 0.63806136
=0.9937

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 - (3075 + 26645) / 32483) / (1 - (2242 + 25736) / 30342)
=0.08505988 / 0.07791181
=1.0917

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
=11245 / 11040
=1.0186

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 + 25736)) / (922 / (922 + 26645))
=0.03458624 / 0.03344579
=1.0341

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)
=(3828 / 11245) / (3781 / 11040)
=0.34041796 / 0.34248188
=0.994

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)
=((8903 + 2305) / 32483) / ((8432 + 2081) / 30342)
=0.34504202 / 0.34648342
=0.9958

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
=(1910 - 233 - 3078) / 32483
=-0.0431

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 Corporation has a M-score of -2.71 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 Corporation 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 Corporation Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 0.97151.07870.98680.99791.01141.09811.13171.02621.01420.9065
GMI 1.0411.03311.0020.98570.99490.99511.00871.02431.00610.9937
AQI 0.98030.91730.90340.91570.90070.95920.98710.99050.98211.0917
SGI 1.16651.1741.14581.09821.03590.98820.9690.96190.99061.0186
DEPI 1.01851.00110.9950.99160.98910.99160.99971.01631.03311.0341
SGAI 0.93360.93540.94230.95441.12261.28661.30081.31761.13950.994
LVGI 1.01321.03861.15271.09491.11571.08771.00111.00261.00510.9958
TATA -0.0589-0.0515-0.0603-0.0473-0.0421-0.0476-0.0392-0.0461-0.0451-0.0431
M-score -2.61-2.51-2.72-2.68-2.74-2.72-2.62-2.75-2.71-2.71
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