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GuruFocus has detected 2 Warning Signs with Newfield Exploration Co $NFX.
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Newfield Exploration Co (NYSE:NFX)
Beneish M-Score
-3.50 (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.

Newfield Exploration Co has a M-score of -3.50 suggests that the company is not a manipulator.

NFX' s Beneish M-Score Range Over the Past 10 Years
Min: -8.3   Max: 0.86
Current: -3.5

-8.3
0.86

During the past 13 years, the highest Beneish M-Score of Newfield Exploration Co was 0.86. The lowest was -8.30. And the median was -3.16.


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 Newfield Exploration Co 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 * 1.4279+0.528 * 0.9857+0.404 * 0.5913+0.892 * 1.0757+0.115 * 1.5295
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8924+4.679 * -0.2883-0.327 * 1.1111
=-3.50

* 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 $149 Mil.
Revenue was 417 + 415 + 392 + 381 = $1,605 Mil.
Gross Profit was 275 + 274 + 248 + 242 = $1,039 Mil.
Total Current Assets was $865 Mil.
Total Assets was $4,388 Mil.
Property, Plant and Equipment(Net PPE) was $3,460 Mil.
Depreciation, Depletion and Amortization(DDA) was $501 Mil.
Selling, General & Admin. Expense(SGA) was $216 Mil.
Total Current Liabilities was $583 Mil.
Long-Term Debt was $2,432 Mil.
Net Income was 147 + 13 + 48 + -667 = $-459 Mil.
Non Operating Income was 55 + -66 + 29 + -133 = $-115 Mil.
Cash Flow from Operations was 167 + 239 + 209 + 306 = $921 Mil.
Accounts Receivable was $97 Mil.
Revenue was 284 + 362 + 377 + 469 = $1,492 Mil.
Gross Profit was 150 + 234 + 241 + 327 = $952 Mil.
Total Current Assets was $1,088 Mil.
Total Assets was $4,777 Mil.
Property, Plant and Equipment(Net PPE) was $3,573 Mil.
Depreciation, Depletion and Amortization(DDA) was $857 Mil.
Selling, General & Admin. Expense(SGA) was $225 Mil.
Total Current Liabilities was $525 Mil.
Long-Term Debt was $2,429 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)
=(149 / 1605) / (97 / 1492)
=0.09283489 / 0.0650134
=1.4279

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)
=(952 / 1492) / (1039 / 1605)
=0.63806971 / 0.64735202
=0.9857

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 - (865 + 3460) / 4388) / (1 - (1088 + 3573) / 4777)
=0.01435734 / 0.02428302
=0.5913

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
=1605 / 1492
=1.0757

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))
=(857 / (857 + 3573)) / (501 / (501 + 3460))
=0.19345372 / 0.12648321
=1.5295

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)
=(216 / 1605) / (225 / 1492)
=0.13457944 / 0.15080429
=0.8924

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)
=((2432 + 583) / 4388) / ((2429 + 525) / 4777)
=0.68710119 / 0.61837974
=1.1111

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
=(-459 - -115 - 921) / 4388
=-0.2883

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.

Newfield Exploration Co has a M-score of -3.50 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.

Newfield Exploration Co Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.83290.90510.92240.67642.22191.23850.54530.42940.89121.8342
GMI 11111.32371.0270.99930.99541.13551.0488
AQI 0.31873.22880.39051.13471.0540.83490.85471.51651.35130.4074
SGI 1.06581.24790.60131.40730.92510.89671.18891.23210.68050.9454
DEPI 0.99480.95121.07321.1331.01740.71811.20311.04240.51871.267
SGAI 1.23252.0990.58980.76981.24721.30730.8730.82271.61510.9234
LVGI 0.86581.59371.03060.92691.01561.15541.05660.7761.5741.1061
TATA -0.0747-0.2253-0.3801-0.1882-0.1387-0.3094-0.1288-0.1139-1.0101-0.4337
M-score -3.20-2.89-4.86-3.16-1.92-3.99-3.36-3.02-7.73-3.99

Newfield Exploration Co Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.42940.38761.35290.49830.89121.56180.40751.77381.83421.4279
GMI 0.99541.08241.17661.29611.13551.09541.07450.99141.04880.9857
AQI 1.51653.39915.03223.91211.35130.81320.48790.33210.40740.5913
SGI 1.23211.00390.86040.71640.68050.72220.73010.83960.94541.0757
DEPI 1.04240.99180.76230.59930.51870.54460.73961.03291.2671.5295
SGAI 0.82270.99181.00981.38981.61511.36051.49891.19620.92340.8924
LVGI 0.7760.90450.94081.33211.5741.49321.63061.22681.10611.1111
TATA -0.1139-0.2015-0.411-0.7852-1.0101-0.9734-0.9704-0.6459-0.4337-0.2883
M-score -3.02-2.94-2.49-5.76-7.73-7.07-8.30-5.31-3.99-3.50
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