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GuruFocus has detected 6 Warning Signs with Nasdaq Inc $NDAQ.
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Nasdaq Inc (NAS:NDAQ)
Beneish M-Score
-2.29 (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.

Nasdaq Inc has a M-score of -2.29 suggests that the company is not a manipulator.

NDAQ' s Beneish M-Score Range Over the Past 10 Years
Min: -3.96   Max: -1.1
Current: -2.29

-3.96
-1.1

During the past 13 years, the highest Beneish M-Score of Nasdaq Inc was -1.10. The lowest was -3.96. 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 Nasdaq 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 * 1.2465+0.528 * 0.9996+0.404 * 0.9344+0.892 * 1.0891+0.115 * 0.9368
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0056+4.679 * -0.0024-0.327 * 1.2191
=-2.29

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $429 Mil.
Revenue was 973 + 929 + 897 + 905 = $3,704 Mil.
Gross Profit was 599 + 585 + 559 + 534 = $2,277 Mil.
Total Current Assets was $4,560 Mil.
Total Assets was $14,150 Mil.
Property, Plant and Equipment(Net PPE) was $362 Mil.
Depreciation, Depletion and Amortization(DDA) was $170 Mil.
Selling, General & Admin. Expense(SGA) was $1,150 Mil.
Total Current Liabilities was $4,082 Mil.
Long-Term Debt was $3,603 Mil.
Net Income was -225 + 131 + 70 + 132 = $108 Mil.
Non Operating Income was -588 + 2 + 3 + 3 = $-580 Mil.
Cash Flow from Operations was 269 + 61 + 141 + 251 = $722 Mil.
Accounts Receivable was $316 Mil.
Revenue was 865 + 871 + 807 + 858 = $3,401 Mil.
Gross Profit was 536 + 529 + 518 + 507 = $2,090 Mil.
Total Current Assets was $3,260 Mil.
Total Assets was $11,861 Mil.
Property, Plant and Equipment(Net PPE) was $323 Mil.
Depreciation, Depletion and Amortization(DDA) was $138 Mil.
Selling, General & Admin. Expense(SGA) was $1,050 Mil.
Total Current Liabilities was $2,920 Mil.
Long-Term Debt was $2,364 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)
=(429 / 3704) / (316 / 3401)
=0.11582073 / 0.09291385
=1.2465

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)
=(2090 / 3401) / (2277 / 3704)
=0.61452514 / 0.61474082
=0.9996

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 - (4560 + 362) / 14150) / (1 - (3260 + 323) / 11861)
=0.65215548 / 0.69791754
=0.9344

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
=3704 / 3401
=1.0891

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))
=(138 / (138 + 323)) / (170 / (170 + 362))
=0.29934924 / 0.31954887
=0.9368

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)
=(1150 / 3704) / (1050 / 3401)
=0.31047516 / 0.30873273
=1.0056

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)
=((3603 + 4082) / 14150) / ((2364 + 2920) / 11861)
=0.54310954 / 0.44549363
=1.2191

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
=(108 - -580 - 722) / 14150
=-0.0024

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.

Nasdaq Inc has a M-score of -2.29 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.

Nasdaq Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.72780.90690.95011.05830.95931.19141.14670.90810.83551.2469
GMI 1.24390.83340.9390.89660.96650.91620.90910.99930.96160.9993
AQI 1.14881.35331.19720.69331.11721.56670.89390.95451.00540.9344
SGI 1.46981.4980.93450.93551.07740.90751.02921.090.97231.0887
DEPI 1.38471.11610.86831.00591.06881.09321.05540.97961.06680.9368
SGAI 0.68931.1021.15911.14081.01051.08241.23090.95310.98621.0068
LVGI 0.33823.25380.76121.45910.89590.54381.36911.02031.01911.2191
TATA -0.03970.0128-0.018-0.002-0.0189-0.0198-0.0161-0.0134-0.0224-0.0025
M-score -1.99-2.75-2.59-2.85-2.47-2.15-2.64-2.57-2.78-2.29

Nasdaq Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.90420.90810.77090.82110.74570.83620.97171.18821.20651.2465
GMI 0.95490.99931.00861.01451.00610.96070.96240.98280.97380.9996
AQI 0.94960.95450.9540.99391.01231.00540.93520.97490.96850.9344
SGI 1.10011.091.02820.99591.00760.97140.99621.03971.04051.0891
DEPI 0.97530.97961.00661.04131.05581.06681.07491.00880.95860.9368
SGAI 0.97530.95230.9920.94270.92880.98890.95790.96651.02221.0056
LVGI 1.01281.02031.07581.00841.02541.01911.08631.18751.16851.2191
TATA -0.0158-0.0135-0.0261-0.0217-0.0248-0.0225-0.0112-0.0122-0.0126-0.0024
M-score -2.60-2.57-2.82-2.73-2.80-2.78-2.62-2.40-2.40-2.29
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