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GuruFocus has detected 2 Warning Signs with Nabors Industries Ltd $NBR.
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Nabors Industries Ltd (NYSE:NBR)
Beneish M-Score
-3.01 (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.

Nabors Industries Ltd has a M-score of -3.01 suggests that the company is not a manipulator.

NBR' s Beneish M-Score Range Over the Past 10 Years
Min: -4   Max: -1.26
Current: -3.01

-4
-1.26

During the past 13 years, the highest Beneish M-Score of Nabors Industries Ltd was -1.26. The lowest was -4.00. 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 Nabors Industries Ltd 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 * 1.1325+0.528 * 0.9724+0.404 * 1.1135+0.892 * 0.7641+0.115 * 0.9508
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1036+4.679 * -0.0888-0.327 * 1.1001
=-3.01

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $514 Mil.
Revenue was 563.273 + 539.212 + 520.041 + 517.092 = $2,140 Mil.
Gross Profit was 175.629 + 207.652 + 213.605 + 175.813 = $773 Mil.
Total Current Assets was $1,123 Mil.
Total Assets was $8,095 Mil.
Property, Plant and Equipment(Net PPE) was $6,219 Mil.
Depreciation, Depletion and Amortization(DDA) was $864 Mil.
Selling, General & Admin. Expense(SGA) was $229 Mil.
Total Current Liabilities was $772 Mil.
Long-Term Debt was $3,662 Mil.
Net Income was -148.984 + -335.587 + -111.211 + -184.65 = $-780 Mil.
Non Operating Income was -13.51 + -275.27 + -10.392 + -74.607 = $-374 Mil.
Cash Flow from Operations was -57.991 + 127.137 + 68.096 + 175.166 = $312 Mil.
Accounts Receivable was $595 Mil.
Revenue was 430.763 + 693.685 + 812.431 + 863.37 = $2,800 Mil.
Gross Profit was 65.74 + 248.555 + 294.257 + 374.848 = $983 Mil.
Total Current Assets was $1,259 Mil.
Total Assets was $8,950 Mil.
Property, Plant and Equipment(Net PPE) was $6,942 Mil.
Depreciation, Depletion and Amortization(DDA) was $911 Mil.
Selling, General & Admin. Expense(SGA) was $271 Mil.
Total Current Liabilities was $871 Mil.
Long-Term Debt was $3,584 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)
=(514.446 / 2139.618) / (594.506 / 2800.249)
=0.24043825 / 0.21230469
=1.1325

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)
=(983.4 / 2800.249) / (772.699 / 2139.618)
=0.35118306 / 0.36113876
=0.9724

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 - (1122.656 + 6218.699) / 8095.312) / (1 - (1259.387 + 6942.315) / 8950.331)
=0.09313501 / 0.0836426
=1.1135

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
=2139.618 / 2800.249
=0.7641

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))
=(910.937 / (910.937 + 6942.315)) / (864.065 / (864.065 + 6218.699))
=0.11599488 / 0.12199545
=0.9508

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)
=(228.714 / 2139.618) / (271.232 / 2800.249)
=0.10689478 / 0.09685996
=1.1036

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)
=((3661.665 + 771.649) / 8095.312) / ((3584.402 + 871.268) / 8950.331)
=0.54763967 / 0.49782181
=1.1001

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
=(-780.432 - -373.779 - 312.408) / 8095.312
=-0.0888

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.

Nabors Industries Ltd has a M-score of -3.01 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 local exchange's currency.

Nabors Industries Ltd Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.93541.04070.931.31210.96350.80061.08570.99490.92871.2239
GMI 1.10261.06550.9481.02431.09261.14670.93511.07190.90351.1343
AQI 0.89150.80980.79681.35460.8840.69311.03710.6622.46440.8602
SGI 1.00111.07330.67071.17521.46561.09540.93231.08980.55680.5293
DEPI 0.94130.9550.98250.88650.88840.95840.9530.9620.9690.9934
SGAI 1.04181.02511.33170.67220.98260.9920.97110.95611.16491.3259
LVGI 0.89410.94630.95041.04841.06320.91420.98491.15940.98281.0997
TATA -0.0402-0.1155-0.1849-0.0776-0.0936-0.1031-0.0784-0.1194-0.0943-0.1245
M-score -2.70-2.95-3.86-2.22-2.56-3.08-2.84-3.11-2.87-3.35

Nabors Industries Ltd Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.99490.62530.67890.72850.92871.45171.33031.30651.22391.1325
GMI 1.07191.01660.97970.95630.90350.97761.1161.10831.13430.9724
AQI 0.6621.57091.70521.44692.46440.8060.74410.93990.86021.1135
SGI 1.08981.06830.92390.73640.55680.42150.41710.44270.52930.7641
DEPI 0.9620.8360.87320.87970.9691.16871.07841.05210.99340.9508
SGAI 0.95610.9320.94350.97451.16491.33731.42731.49621.32591.1036
LVGI 1.15941.13161.10141.07290.98281.06151.08081.04971.09971.1001
TATA -0.1194-0.119-0.1129-0.1025-0.0943-0.1159-0.1244-0.1332-0.1245-0.0888
M-score -3.11-3.13-3.14-3.32-2.87-3.27-3.41-3.38-3.35-3.01
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