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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 10-Year Beneish M-Score Range
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 -2.60.


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 * 0.9058+0.528 * 0.9869+0.404 * 1.008+0.892 * 1.0273+0.115 * 1.005
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.982+4.679 * -0.0314-0.327 * 0.9357
=-2.67

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
Accounts Receivable was $1,032 Mil.
Revenue was 2567 + 2870 + 3023 + 3042 = $11,502 Mil.
Gross Profit was 1634 + 1845 + 1962 + 1972 = $7,413 Mil.
Total Current Assets was $2,115 Mil.
Total Assets was $32,775 Mil.
Property, Plant and Equipment(Net PPE) was $27,829 Mil.
Depreciation, Depletion and Amortization(DDA) was $964 Mil.
Selling, General & Admin. Expense(SGA) was $4,235 Mil.
Total Current Liabilities was $2,103 Mil.
Long-Term Debt was $8,429 Mil.
Net Income was 310 + 511 + 559 + 562 = $1,942 Mil.
Non Operating Income was 21 + 31 + 32 + 18 = $102 Mil.
Cash Flow from Operations was 605 + 506 + 909 + 849 = $2,869 Mil.
Accounts Receivable was $1,109 Mil.
Revenue was 2689 + 2881 + 2824 + 2802 = $11,196 Mil.
Gross Profit was 1644 + 1875 + 1814 + 1788 = $7,121 Mil.
Total Current Assets was $3,130 Mil.
Total Assets was $32,700 Mil.
Property, Plant and Equipment(Net PPE) was $26,768 Mil.
Depreciation, Depletion and Amortization(DDA) was $932 Mil.
Selling, General & Admin. Expense(SGA) was $4,198 Mil.
Total Current Liabilities was $2,321 Mil.
Long-Term Debt was $8,909 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)
=(1032 / 11502) / (1109 / 11196)
=0.08972353 / 0.09905323
=0.9058

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)
=(1845 / 11196) / (1634 / 11502)
=0.63603073 / 0.64449661
=0.9869

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 - (2115 + 27829) / 32775) / (1 - (3130 + 26768) / 32700)
=0.08637681 / 0.08568807
=1.008

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
=11502 / 11196
=1.0273

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))
=(932 / (932 + 26768)) / (964 / (964 + 27829))
=0.03364621 / 0.03348036
=1.005

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)
=(4235 / 11502) / (4198 / 11196)
=0.36819684 / 0.37495534
=0.982

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)
=((8429 + 2103) / 32775) / ((8909 + 2321) / 32700)
=0.32134249 / 0.34342508
=0.9357

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
=(1942 - 102 - 2869) / 32775
=-0.0314

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

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

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 1.09811.13171.02621.01420.90650.940.99910.96710.99670.9058
GMI 0.99511.00871.02431.00610.99370.99340.98140.98530.99920.9869
AQI 0.95920.98710.99050.98211.09171.08981.08571.1390.97931.008
SGI 0.98820.9690.96190.99061.01861.01881.04751.05311.03371.0273
DEPI 0.99160.99971.01631.03311.03411.02491.00750.99951.00231.005
SGAI 1.28661.43621.59771.37991.20250.98860.87350.8640.87570.982
LVGI 1.08771.00111.00261.00510.99581.01611.0110.95940.93330.9357
TATA -0.0476-0.0304-0.0373-0.0364-0.0349-0.038-0.0363-0.0342-0.0288-0.0314
M-score -2.72-2.60-2.76-2.71-2.71-2.66-2.56-2.54-2.55-2.67
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