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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 -2.54.
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 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 * 0.7067||+||0.528 * 0.8668||+||0.404 * 2.4269||+||0.892 * 0.6331||+||0.115 * 0.5188|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1233||+||4.679 * 0.003||-||0.327 * 0.7345|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $155 Mil.|
Revenue was 226.557 + 244.782 + 284.652 + 420.765 = $1,177 Mil.
Gross Profit was 125.367 + 125.512 + 144.166 + 190.76 = $586 Mil.
Total Current Assets was $687 Mil.
Total Assets was $2,704 Mil.
Property, Plant and Equipment(Net PPE) was $582 Mil.
Depreciation, Depletion and Amortization(DDA) was $199 Mil.
Selling, General & Admin. Expense(SGA) was $704 Mil.
Total Current Liabilities was $921 Mil.
Long-Term Debt was $90 Mil.
Net Income was -36.588 + -84.582 + -189.421 + 2050.033 = $1,739 Mil.
Non Operating Income was 36.771 + 2.633 + -103.546 + 1975.967 = $1,912 Mil.
Cash Flow from Operations was -18.16 + -13.594 + -64.891 + -83.902 = $-181 Mil.
|Accounts Receivable was $347 Mil.
Revenue was 363.408 + 432.005 + 476.264 + 586.914 = $1,859 Mil.
Gross Profit was 177.532 + 168.2 + 216.646 + 239.612 = $802 Mil.
Total Current Assets was $1,738 Mil.
Total Assets was $4,897 Mil.
Property, Plant and Equipment(Net PPE) was $2,088 Mil.
Depreciation, Depletion and Amortization(DDA) was $318 Mil.
Selling, General & Admin. Expense(SGA) was $990 Mil.
Total Current Liabilities was $1,807 Mil.
Long-Term Debt was $687 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)|
|=||(155.153 / 1176.756)||/||(346.772 / 1858.591)|
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)|
|=||(801.99 / 1858.591)||/||(585.805 / 1176.756)|
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 - (686.965 + 582.172) / 2703.86)||/||(1 - (1737.928 + 2088.365) / 4896.965)|
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))|
|=||(318.277 / (318.277 + 2088.365))||/||(199.178 / (199.178 + 582.172))|
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)|
|=||(703.854 / 1176.756)||/||(989.64 / 1858.591)|
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)|
|=||((90.279 + 920.995) / 2703.86)||/||((687.094 + 1806.603) / 4896.965)|
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|
|=||(1739.442 - 1911.825||-||-180.547)||/||2703.86|
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 -2.55 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