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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 -0.81. The lowest was -4.88. And the median was -2.58.
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 * 0.8184||+||0.528 * 1.012||+||0.404 * 1.0694||+||0.892 * 0.9808||+||0.115 * 1.0549|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0045||+||4.679 * -0.07||-||0.327 * 0.918|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $73.9 Mil.|
Revenue was 173.421 + 286.519 + 239.107 + 196.5 = $895.5 Mil.
Gross Profit was 40.005 + 63.711 + 42.215 + 35.381 = $181.3 Mil.
Total Current Assets was $315.8 Mil.
Total Assets was $606.5 Mil.
Property, Plant and Equipment(Net PPE) was $132.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $22.1 Mil.
Selling, General & Admin. Expense(SGA) was $193.8 Mil.
Total Current Liabilities was $140.8 Mil.
Long-Term Debt was $157.5 Mil.
Net Income was 2.802 + 18.091 + 3.141 + -0.275 = $23.8 Mil.
Non Operating Income was -0.126 + 0.451 + -0.888 + 0.042 = $-0.5 Mil.
Cash Flow from Operations was -3.819 + 48.188 + 9.933 + 12.409 = $66.7 Mil.
|Accounts Receivable was $92.0 Mil.
Revenue was 193.734 + 297.285 + 221.714 + 200.37 = $913.1 Mil.
Gross Profit was 38.189 + 65.835 + 46.543 + 36.523 = $187.1 Mil.
Total Current Assets was $337.5 Mil.
Total Assets was $653.6 Mil.
Property, Plant and Equipment(Net PPE) was $156.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $27.8 Mil.
Selling, General & Admin. Expense(SGA) was $196.7 Mil.
Total Current Liabilities was $185.2 Mil.
Long-Term Debt was $164.9 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)|
|=||(73.851 / 895.547)||/||(92.007 / 913.103)|
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)|
|=||(187.09 / 913.103)||/||(181.312 / 895.547)|
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 - (315.766 + 132.345) / 606.514)||/||(1 - (337.452 + 156.551) / 653.637)|
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))|
|=||(27.849 / (27.849 + 156.551))||/||(22.114 / (22.114 + 132.345))|
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)|
|=||(193.768 / 895.547)||/||(196.684 / 913.103)|
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)|
|=||((157.468 + 140.797) / 606.514)||/||((164.935 + 185.217) / 653.637)|
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|
|=||(23.759 - -0.521||-||66.711)||/||606.514|
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 -2.93 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