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Norfolk Southern Corp (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 Corp has a M-score of -2.71 suggests that the company is not a manipulator.

NSC' s 10-Year Beneish M-Score Range
Min: -4.29   Max: 1.94
Current: -2.71

-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 -2.60.


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 * 0.9624+0.528 * 0.9877+0.404 * 0.9832+0.892 * 0.977+0.115 * 1.0122
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0379+4.679 * -0.0354-0.327 * 0.984
=-2.71

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
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 $3,830 Mil.
Total Current Liabilities was $2,203 Mil.
Long-Term Debt was $8,890 Mil.
Net Income was 433 + 310 + 511 + 559 = $1,813 Mil.
Non Operating Income was 19 + 21 + 31 + 32 = $103 Mil.
Cash Flow from Operations was 868 + 605 + 506 + 909 = $2,888 Mil.
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 $3,777 Mil.
Total Current Liabilities was $2,368 Mil.
Long-Term Debt was $8,814 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)
=(1055 / 11173) / (1122 / 11436)
=0.09442406 / 0.09811123
=0.9624

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)
=(1634 / 11436) / (1785 / 11173)
=0.6387723 / 0.64673767
=0.9877

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 - (2413 + 28075) / 33310) / (1 - (3266 + 26927) / 33040)
=0.0847193 / 0.08616828
=0.9832

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
=11173 / 11436
=0.977

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))
=(944 / (944 + 26927)) / (972 / (972 + 28075))
=0.03387033 / 0.03346301
=1.0122

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)
=(3830 / 11173) / (3777 / 11436)
=0.34279066 / 0.33027282
=1.0379

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)
=((8890 + 2203) / 33310) / ((8814 + 2368) / 33040)
=0.33302312 / 0.33843826
=0.984

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
=(1813 - 103 - 2888) / 33310
=-0.0354

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 -2.71 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 Corp Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.04090.96580.81711.17790.88231.07871.09810.90650.9967
GMI 0.98331.09021.01680.94471.0011.03310.99510.99370.9992
AQI 1.04911.0160.70651.16180.97720.91730.95921.09170.9793
SGI 1.16621.10321.13030.74751.19411.1740.98821.01861.0337
DEPI 0.7881.06520.99430.98231.04781.00110.99161.03411.0023
SGAI 0.961600.93051.19680.94450.93541.5530.99620.9576
LVGI 0.90150.95451.03680.98170.99131.03861.08770.99580.9333
TATA -0.0347-0.0336-0.0422-0.0348-0.0486-0.0515-0.0476-0.0433-0.0288
M-score -2.43-2.33-2.84-2.70-2.63-2.51-2.77-2.71-2.57

Norfolk Southern Corp Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 1.13171.02621.01420.90650.940.99910.96710.99670.90580.9624
GMI 1.00871.02431.00610.99370.99340.98140.98530.99920.98690.9877
AQI 0.98710.99050.98211.09171.08981.08571.1390.97931.0080.9832
SGI 0.9690.96190.99061.01861.01881.04751.05311.03371.02730.977
DEPI 0.99971.01631.03311.03411.02491.00750.99951.00231.0051.0122
SGAI 1.43621.59771.37991.20250.98860.78720.77870.78920.8861.0379
LVGI 1.00111.00261.00510.99581.01611.0110.95940.93330.93570.984
TATA -0.0304-0.0373-0.0364-0.0349-0.038-0.0363-0.0342-0.0288-0.0314-0.0354
M-score -2.60-2.76-2.71-2.71-2.66-2.55-2.52-2.54-2.65-2.71
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