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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.
NCR Corp has a M-score of -2.36 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of NCR Corp was -2.09. The lowest was -3.08. And the median was -2.54.
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 NCR 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 * 1.096||+||0.528 * 0.8511||+||0.404 * 1.1603||+||0.892 * 1.0551||+||0.115 * 0.9257|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.897||+||4.679 * 0.0068||-||0.327 * 1.1252|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $1,464 Mil.|
Revenue was 1658 + 1518 + 1670 + 1508 = $6,354 Mil.
Gross Profit was 480 + 416 + 530 + 415 = $1,841 Mil.
Total Current Assets was $3,390 Mil.
Total Assets was $8,849 Mil.
Property, Plant and Equipment(Net PPE) was $402 Mil.
Depreciation, Depletion and Amortization(DDA) was $253 Mil.
Selling, General & Admin. Expense(SGA) was $902 Mil.
Total Current Liabilities was $1,976 Mil.
Long-Term Debt was $3,840 Mil.
Net Income was 90 + 53 + 198 + 98 = $439 Mil.
Non Operating Income was -3 + -7 + -11 + -3 = $-24 Mil.
Cash Flow from Operations was 80 + 31 + 265 + 27 = $403 Mil.
|Accounts Receivable was $1,266 Mil.
Revenue was 1535 + 1410 + 1642 + 1435 = $6,022 Mil.
Gross Profit was 426 + 369 + 332 + 358 = $1,485 Mil.
Total Current Assets was $3,076 Mil.
Total Assets was $6,706 Mil.
Property, Plant and Equipment(Net PPE) was $327 Mil.
Depreciation, Depletion and Amortization(DDA) was $182 Mil.
Selling, General & Admin. Expense(SGA) was $953 Mil.
Total Current Liabilities was $1,838 Mil.
Long-Term Debt was $2,079 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)|
|=||(1464 / 6354)||/||(1266 / 6022)|
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)|
|=||(416 / 6022)||/||(480 / 6354)|
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 - (3390 + 402) / 8849)||/||(1 - (3076 + 327) / 6706)|
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))|
|=||(182 / (182 + 327))||/||(253 / (253 + 402))|
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)|
|=||(902 / 6354)||/||(953 / 6022)|
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)|
|=||((3840 + 1976) / 8849)||/||((2079 + 1838) / 6706)|
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|
|=||(439 - -24||-||403)||/||8849|
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.
NCR Corp has a M-score of -2.36 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
NCR Corp Annual Data
NCR Corp Quarterly Data