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Nicholas Financial Inc (NAS:NICK)
Beneish M-Score
-1.21 (As of Today)

Warning Sign:

Beneish M-Score -1.21 higher than -2.22, which implies that it might have manipulated its financial results.

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.

Nicholas Financial Inc has a M-score of -1.21 signals that the company is a manipulator.

NICK' s 10-Year Beneish M-Score Range
Min: -3.78   Max: 17767.83
Current: -1.21

-3.78
17767.83

During the past 13 years, the highest Beneish M-Score of Nicholas Financial Inc was 17767.83. The lowest was -3.78. And the median was -1.46.


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 Nicholas Financial 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 * 1.0724+0.528 * 1+0.404 * 0.8302+0.892 * 1.0162+0.115 * 1.0132
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1425+4.679 * 0.2703-0.327 * 0.9585
=-1.21

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $278.17 Mil.
Revenue was 21.333 + 20.443 + 20.761 + 20.949 = $83.49 Mil.
Gross Profit was 21.333 + 20.441 + 20.759 + 20.946 = $83.48 Mil.
Total Current Assets was $283.32 Mil.
Total Assets was $291.29 Mil.
Property, Plant and Equipment(Net PPE) was $0.90 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.33 Mil.
Selling, General & Admin. Expense(SGA) was $34.45 Mil.
Total Current Liabilities was $141.63 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was 4.909 + 2.86 + 3.827 + 4.317 = $15.91 Mil.
Non Operating Income was -21.333 + -20.441 + -20.756 + -20.943 = $-83.47 Mil.
Cash Flow from Operations was 7.003 + 5.523 + 5.047 + 3.083 = $20.66 Mil.
Accounts Receivable was $255.26 Mil.
Revenue was 20.476 + 20.372 + 20.605 + 20.705 = $82.16 Mil.
Gross Profit was 20.476 + 20.37 + 20.601 + 20.704 = $82.15 Mil.
Total Current Assets was $261.44 Mil.
Total Assets was $270.09 Mil.
Property, Plant and Equipment(Net PPE) was $0.76 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.29 Mil.
Selling, General & Admin. Expense(SGA) was $29.67 Mil.
Total Current Liabilities was $137.01 Mil.
Long-Term Debt was $0.00 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)
=(278.173 / 83.486) / (255.258 / 82.158)
=3.33197183 / 3.10691594
=1.0724

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)
=(20.441 / 82.158) / (21.333 / 83.486)
=0.9999148 / 0.99991615
=1

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 - (283.318 + 0.897) / 291.285) / (1 - (261.439 + 0.757) / 270.092)
=0.02427176 / 0.02923448
=0.8302

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
=83.486 / 82.158
=1.0162

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))
=(0.287 / (0.287 + 0.757)) / (0.334 / (0.334 + 0.897))
=0.27490421 / 0.27132413
=1.0132

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)
=(34.446 / 83.486) / (29.669 / 82.158)
=0.41259612 / 0.36112125
=1.1425

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)
=((0 + 141.63) / 291.285) / ((0 + 137.01) / 270.092)
=0.48622483 / 0.5072716
=0.9585

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
=(15.913 - -83.473 - 20.656) / 291.285
=0.2703

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.

Nicholas Financial Inc has a M-score of -1.21 signals that the company is likely to 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 own currency.

Nicholas Financial Inc Annual Data

Mar05Mar06Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14
DSRI 0.71011.37059276.99250.98341.01961.02280.81891.01371.0753
GMI 0.99910.99931.00030.999610.99990.999911
AQI 1.00041.00011.00140.03461.03821.15020.86550.89810.7623
SGI 1.29991.09451.07221.06031.06351.11161.28261.01981.0063
DEPI 0.82281.03980.89680.93230.96181.27350.93510.99121.0367
SGAI 0.9882.96031.01671.0270.98970.99370.81631.06121.1612
LVGI 1.01950.98560.96881.04460.97470.97490.89661.0920.9596
TATA -0.00390.24320.22560.18240.21460.23870.3150.28960.2751
M-score -2.52-1.258,532.55-2.01-1.38-1.14-0.92-1.18-1.22

Nicholas Financial Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 1.04141.0010.58350.56890.79720.85241.1181.1671.07531.0724
GMI 110.99990.99990.99990.99991111
AQI 0.86550.94831.01311.02080.89810.73110.72380.71850.76230.8302
SGI 1.00861.04121.80171.82981.29681.22420.93850.90461.00631.0162
DEPI 0.93280.92020.9310.98090.99620.98740.96290.96071.03411.0132
SGAI 1.04041.00470.57910.56950.83270.89541.17631.2591.16121.1425
LVGI 0.89660.89790.90711.0811.0921.10731.12450.93680.95960.9585
TATA 0.2480.2530.32090.33860.28960.28880.28240.27680.27510.2703
M-score -1.31-1.26-0.55-0.50-1.09-1.19-1.29-1.26-1.22-1.21
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