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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 NII Holdings Inc was 2.77. The lowest was -12.42. And the median was -2.56.
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 NII Holdings 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 * 1.2963||+||0.528 * 0.7637||+||0.404 * 0.757||+||0.892 * 0.7008||+||0.115 * 0.5531|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.955||+||4.679 * -1.0388||-||0.327 * 2.1617|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $162.9 Mil.|
Revenue was 260.836 + 249.213 + 226.557 + 244.782 = $981.4 Mil.
Gross Profit was 158.53 + 158.442 + 125.367 + 125.512 = $567.9 Mil.
Total Current Assets was $781.1 Mil.
Total Assets was $1,476.9 Mil.
Property, Plant and Equipment(Net PPE) was $121.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $196.1 Mil.
Selling, General & Admin. Expense(SGA) was $548.2 Mil.
Total Current Liabilities was $1,008.3 Mil.
Long-Term Debt was $96.7 Mil.
Net Income was -1418.943 + -9.871 + -36.588 + -84.582 = $-1,550.0 Mil.
Non Operating Income was -7.444 + 40.687 + 36.771 + 2.633 = $72.6 Mil.
Cash Flow from Operations was -82.938 + 26.19 + -18.16 + -13.594 = $-88.5 Mil.
|Accounts Receivable was $179.3 Mil.
Revenue was 284.652 + 320.303 + 363.408 + 432.005 = $1,400.4 Mil.
Gross Profit was 144.166 + 128.951 + 177.532 + 168.2 = $618.8 Mil.
Total Current Assets was $817.7 Mil.
Total Assets was $2,842.8 Mil.
Property, Plant and Equipment(Net PPE) was $563.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $292.9 Mil.
Selling, General & Admin. Expense(SGA) was $819.0 Mil.
Total Current Liabilities was $896.5 Mil.
Long-Term Debt was $87.5 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)|
|=||(162.907 / 981.388)||/||(179.316 / 1400.368)|
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)|
|=||(618.849 / 1400.368)||/||(567.851 / 981.388)|
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 - (781.086 + 121.051) / 1476.866)||/||(1 - (817.697 + 563.595) / 2842.79)|
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))|
|=||(292.882 / (292.882 + 563.595))||/||(196.089 / (196.089 + 121.051))|
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)|
|=||(548.168 / 981.388)||/||(819.03 / 1400.368)|
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)|
|=||((96.741 + 1008.348) / 1476.866)||/||((87.51 + 896.532) / 2842.79)|
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|
|=||(-1549.984 - 72.647||-||-88.502)||/||1476.866|
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.
NII Holdings Inc has a M-score of -7.98 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
NII Holdings Inc Annual Data
NII Holdings Inc Quarterly Data