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GuruFocus has detected 5 Warning Signs with Nicholas Financial Inc $NICK.
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Nicholas Financial Inc (NAS:NICK)
Beneish M-Score
-1.30 (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.

Nicholas Financial Inc has a M-score of -1.30 signals that the company is a manipulator.

NICK' s Beneish M-Score Range Over the Past 10 Years
Min: -7.31   Max: 40495.15
Current: -1.3

-7.31
40495.15

During the past 13 years, the highest Beneish M-Score of Nicholas Financial Inc was 40495.15. The lowest was -7.31. And the median was -1.39.


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 * 0.9806+0.528 * 1.107+0.404 * 1.0332+0.892 * 1.0352+0.115 * 0.9314
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9918+4.679 * 0.2329-0.327 * 0.9611
=-1.30

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

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $313.42 Mil.
Revenue was 22.647 + 22.915 + 23.238 + 22.757 = $91.56 Mil.
Gross Profit was 13.795 + 22.915 + 23.238 + 22.757 = $82.71 Mil.
Total Current Assets was $320.39 Mil.
Total Assets was $328.78 Mil.
Property, Plant and Equipment(Net PPE) was $1.62 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.52 Mil.
Selling, General & Admin. Expense(SGA) was $35.19 Mil.
Total Current Liabilities was $216.88 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was 1.97 + 2.903 + 2.725 + 2.727 = $10.33 Mil.
Non Operating Income was -22.647 + -22.915 + -23.238 + -22.757 = $-91.56 Mil.
Cash Flow from Operations was 4.047 + 9.112 + 6.678 + 5.46 = $25.30 Mil.
Accounts Receivable was $308.77 Mil.
Revenue was 22.687 + 22.025 + 21.934 + 21.801 = $88.45 Mil.
Gross Profit was 22.687 + 22.025 + 21.934 + 21.801 = $88.45 Mil.
Total Current Assets was $313.56 Mil.
Total Assets was $321.33 Mil.
Property, Plant and Equipment(Net PPE) was $1.37 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.40 Mil.
Selling, General & Admin. Expense(SGA) was $34.28 Mil.
Total Current Liabilities was $220.55 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)
=(313.424 / 91.557) / (308.771 / 88.447)
=3.42326638 / 3.49102853
=0.9806

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)
=(88.447 / 88.447) / (82.705 / 91.557)
=1 / 0.90331706
=1.107

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 - (320.392 + 1.623) / 328.781) / (1 - (313.557 + 1.369) / 321.326)
=0.02057905 / 0.01991747
=1.0332

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
=91.557 / 88.447
=1.0352

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))
=(0.396 / (0.396 + 1.369)) / (0.515 / (0.515 + 1.623))
=0.22436261 / 0.24087933
=0.9314

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)
=(35.191 / 91.557) / (34.276 / 88.447)
=0.38436165 / 0.38753152
=0.9918

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 + 216.879) / 328.781) / ((0 + 220.546) / 321.326)
=0.65964578 / 0.68636214
=0.9611

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
=(10.325 - -91.557 - 25.297) / 328.781
=0.2329

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 -1.30 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 local exchange's currency.

Nicholas Financial Inc Annual Data

Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14Mar15Mar16
DSRI 1.37050.207344019.97851.01961.02280.81891.01371.07531.0175
GMI 0.99931.00030.999610.99990.99990.99991.00010.9999
AQI 1.00011.00140.03461.03821.15020.86550.89810.76230.8637
SGI 1.09451.07221.06031.06351.11161.28261.01981.00631.0504
DEPI 1.03980.89680.93230.96181.27350.93510.99121.03670.9054
SGAI 2.96031.01671.0270.98970.99370.81631.06171.16590.9464
LVGI 0.98560.96881.04460.97470.97490.89661.0920.95961.4092
TATA 0.24320.22560.18240.21460.23870.3150.28960.27510.2575
M-score -1.25-2.0940,495.47-1.38-1.14-0.92-1.18-1.22-1.40

Nicholas Financial Inc Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 1.07241.04821.04911.01751.03091.05021.04581.03430.99370.9806
GMI 1.00021.00021.00020.99990.99990.99990.9999111.107
AQI 0.83020.86870.84320.86370.86240.8630.92990.96710.97541.0332
SGI 1.01621.02251.03321.05041.04791.04971.04811.04511.0471.0352
DEPI 1.01321.02950.98990.90370.95951.22031.21951.13051.18090.9314
SGAI 1.14711.1221.050.94640.93190.93540.95620.99130.98530.9918
LVGI 0.95850.94520.95041.40921.41711.43541.46090.97010.96120.9611
TATA 0.27020.26450.26350.25750.24250.23860.23810.24290.23910.2329
M-score -1.21-1.23-1.23-1.40-1.46-1.43-1.43-1.26-1.30-1.30
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