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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 -4.01. And the median was -2.59.
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 * 1.0631||+||0.528 * 1.1497||+||0.404 * 1.1791||+||0.892 * 0.9615||+||0.115 * 0.6739|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0367||+||4.679 * -0.0717||-||0.327 * 1.2007|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $123.5 Mil.|
Revenue was 297.285 + 221.714 + 200.37 + 177.413 = $896.8 Mil.
Gross Profit was 65.835 + 46.543 + 36.523 + 36.171 = $185.1 Mil.
Total Current Assets was $465.7 Mil.
Total Assets was $770.5 Mil.
Property, Plant and Equipment(Net PPE) was $159.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $28.1 Mil.
Selling, General & Admin. Expense(SGA) was $198.7 Mil.
Total Current Liabilities was $254.7 Mil.
Long-Term Debt was $191.4 Mil.
Net Income was -40.669 + 7.699 + -3.624 + -1.524 = $-38.1 Mil.
Non Operating Income was -1.982 + -0.211 + -0.455 + -0.05 = $-2.7 Mil.
Cash Flow from Operations was 17.581 + 23.63 + 4.604 + -26.016 = $19.8 Mil.
|Accounts Receivable was $120.8 Mil.
Revenue was 311.983 + 228.614 + 196.017 + 196.052 = $932.7 Mil.
Gross Profit was 78.181 + 49.219 + 47.63 + 46.261 = $221.3 Mil.
Total Current Assets was $461.3 Mil.
Total Assets was $810.0 Mil.
Property, Plant and Equipment(Net PPE) was $219.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $24.6 Mil.
Selling, General & Admin. Expense(SGA) was $199.3 Mil.
Total Current Liabilities was $238.1 Mil.
Long-Term Debt was $152.4 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)|
|=||(123.466 / 896.782)||/||(120.789 / 932.666)|
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)|
|=||(46.543 / 932.666)||/||(65.835 / 896.782)|
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 - (465.713 + 159.644) / 770.52)||/||(1 - (461.29 + 219.256) / 809.956)|
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))|
|=||(24.572 / (24.572 + 219.256))||/||(28.07 / (28.07 + 159.644))|
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)|
|=||(198.697 / 896.782)||/||(199.331 / 932.666)|
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)|
|=||((191.431 + 254.681) / 770.52)||/||((152.431 + 238.119) / 809.956)|
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|
|=||(-38.118 - -2.698||-||19.799)||/||770.52|
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 -2.75 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