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GuruFocus has detected 5 Warning Signs with NorthWestern Corp $NWE.
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NorthWestern Corp (NYSE:NWE)
Beneish M-Score
-2.50 (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.

NorthWestern Corp has a M-score of -2.50 suggests that the company is not a manipulator.

NWE' s Beneish M-Score Range Over the Past 10 Years
Min: -4.74   Max: 9.92
Current: -2.5

-4.74
9.92

During the past 13 years, the highest Beneish M-Score of NorthWestern Corp was 9.92. The lowest was -4.74. And the median was -2.57.


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 NorthWestern 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 * 0.9815+0.528 * 1.001+0.404 * 1.0483+0.892 * 1.0759+0.115 * 0.9611
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9538+4.679 * -0.0227-0.327 * 0.9772
=-2.50

* 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 $143 Mil.
Revenue was 367.312 + 330.59 + 300.998 + 293.12 = $1,292 Mil.
Gross Profit was 247.495 + 222.9 + 204.842 + 211.427 = $887 Mil.
Total Current Assets was $245 Mil.
Total Assets was $5,500 Mil.
Property, Plant and Equipment(Net PPE) was $4,224 Mil.
Depreciation, Depletion and Amortization(DDA) was $161 Mil.
Selling, General & Admin. Expense(SGA) was $304 Mil.
Total Current Liabilities was $545 Mil.
Long-Term Debt was $1,817 Mil.
Net Income was 56.567 + 45.944 + 44.605 + 35.569 = $183 Mil.
Non Operating Income was 1.5 + 1.372 + -0.121 + 1.195 = $4 Mil.
Cash Flow from Operations was 156.775 + 31.024 + 116.994 + -1.142 = $304 Mil.
Accounts Receivable was $135 Mil.
Revenue was 332.539 + 324.989 + 272.739 + 270.56 = $1,201 Mil.
Gross Profit was 217.105 + 217.62 + 199.162 + 191.033 = $825 Mil.
Total Current Assets was $250 Mil.
Total Assets was $5,261 Mil.
Property, Plant and Equipment(Net PPE) was $4,069 Mil.
Depreciation, Depletion and Amortization(DDA) was $149 Mil.
Selling, General & Admin. Expense(SGA) was $296 Mil.
Total Current Liabilities was $518 Mil.
Long-Term Debt was $1,794 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)
=(142.552 / 1292.02) / (134.983 / 1200.827)
=0.11033266 / 0.11240837
=0.9815

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)
=(824.92 / 1200.827) / (886.664 / 1292.02)
=0.6869599 / 0.68626182
=1.001

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 - (244.652 + 4223.69) / 5500.301) / (1 - (250.476 + 4069.086) / 5261.173)
=0.18761864 / 0.17897359
=1.0483

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
=1292.02 / 1200.827
=1.0759

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))
=(148.773 / (148.773 + 4069.086)) / (160.907 / (160.907 + 4223.69))
=0.03527216 / 0.03669824
=0.9611

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)
=(303.994 / 1292.02) / (296.213 / 1200.827)
=0.23528583 / 0.24667417
=0.9538

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)
=((1817.469 + 545.07) / 5500.301) / ((1794.242 + 518.197) / 5261.173)
=0.42952904 / 0.43952917
=0.9772

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
=(182.685 - 3.946 - 303.651) / 5500.301
=-0.0227

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.

NorthWestern Corp has a M-score of -2.50 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.

NorthWestern Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.90411.03271.01961.02481.02081.01941.12850.89560.93720.998
GMI 12.24320.89590.95350.93630.88391.07850.97530.86511.0174
AQI 0.73711.12740.91881.00221.08480.9730.88460.91761.00321.0467
SGI 1.05951.05060.90570.97271.00590.9581.07861.04361.00781.0354
DEPI 1.05231.10751.01921.04420.95221.04531.03651.26240.92640.9449
SGAI 0.87060.97161.19910.99221.12041.05490.98071.02640.96490.9834
LVGI 1.05951.01251.02930.9820.95561.00051.0071.04430.96970.984
TATA -0.0594-0.0479-0.0164-0.0487-0.0452-0.0451-0.0289-0.0281-0.0373-0.0237
M-score -2.89-1.91-2.75-2.72-2.68-2.79-2.43-2.70-2.77-2.53

NorthWestern Corp Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.89560.89180.97470.98010.93720.8920.91030.95540.9980.9815
GMI 0.97530.90120.86180.83910.86510.92880.96391.01381.01741.001
AQI 0.91760.91950.90.89781.00321.00331.01151.05421.04671.0483
SGI 1.04360.97520.96730.99281.00781.01671.03551.04111.03541.0759
DEPI 1.26241.22181.20551.21070.92640.93730.94330.92840.94490.9611
SGAI 1.02641.11821.05641.08360.96490.92520.9810.90720.98340.9538
LVGI 1.04431.04751.02651.03550.96970.98140.98320.96340.9840.9772
TATA -0.0281-0.0294-0.0341-0.0415-0.0373-0.0429-0.0295-0.025-0.0234-0.0227
M-score -2.70-2.83-2.80-2.83-2.77-2.79-2.68-2.55-2.53-2.50
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