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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.
During the past 13 years, the highest Beneish M-Score of Nacco Industries Inc was 21.86. The lowest was -4.82. And the median was -2.61.
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 Nacco Industries Inc 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 * 0.9344||+||0.528 * 1.1208||+||0.404 * 0.9196||+||0.892 * 0.9708||+||0.115 * 1.1179|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0315||+||4.679 * -0.0266||-||0.327 * 1.0543|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $97.6 Mil.|
Revenue was 221.714 + 200.37 + 177.413 + 311.983 = $911.5 Mil.
Gross Profit was 46.543 + 36.523 + 36.171 + 78.181 = $197.4 Mil.
Total Current Assets was $450.4 Mil.
Total Assets was $829.2 Mil.
Property, Plant and Equipment(Net PPE) was $252.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $27.6 Mil.
Selling, General & Admin. Expense(SGA) was $203.4 Mil.
Total Current Liabilities was $287.5 Mil.
Long-Term Debt was $139.0 Mil.
Net Income was 7.699 + -3.624 + -1.524 + 22.556 = $25.1 Mil.
Non Operating Income was -0.211 + -0.455 + -0.05 + -0.394 = $-1.1 Mil.
Cash Flow from Operations was 23.63 + 4.604 + -26.016 + 46.082 = $48.3 Mil.
|Accounts Receivable was $107.6 Mil.
Revenue was 228.614 + 196.017 + 196.052 + 318.2 = $938.9 Mil.
Gross Profit was 49.219 + 47.63 + 46.261 + 84.8 = $227.9 Mil.
Total Current Assets was $455.0 Mil.
Total Assets was $778.1 Mil.
Property, Plant and Equipment(Net PPE) was $193.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $24.1 Mil.
Selling, General & Admin. Expense(SGA) was $203.1 Mil.
Total Current Liabilities was $250.5 Mil.
Long-Term Debt was $129.1 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(97.639 / 911.48)||/||(107.63 / 938.883)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(36.523 / 938.883)||/||(46.543 / 911.48)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (450.443 + 252.039) / 829.16)||/||(1 - (454.955 + 193.864) / 778.089)|
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.
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))|
|=||(24.077 / (24.077 + 193.864))||/||(27.64 / (27.64 + 252.039))|
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)|
|=||(203.372 / 911.48)||/||(203.092 / 938.883)|
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)|
|=||((138.958 + 287.495) / 829.16)||/||((129.123 + 250.468) / 778.089)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(25.107 - -1.11||-||48.3)||/||829.16|
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.
Nacco Industries Inc has a M-score of -2.67 suggests that the company will not be a manipulator.
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
Nacco Industries Inc Annual Data
Nacco Industries Inc Quarterly Data