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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 1.48. The lowest was -15.13. And the median was -2.59.
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 * 0.5895||+||0.528 * 1.1139||+||0.404 * 2.1937||+||0.892 * 0.8032||+||0.115 * 0.306|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0185||+||4.679 * -0.2272||-||0.327 * 0.3589|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $230 Mil.|
Revenue was 420.765 + 763.869 + 854.231 + 926.727 = $2,966 Mil.
Gross Profit was 190.76 + 312.206 + 310.158 + 386.869 = $1,200 Mil.
Total Current Assets was $1,151 Mil.
Total Assets was $3,505 Mil.
Property, Plant and Equipment(Net PPE) was $694 Mil.
Depreciation, Depletion and Amortization(DDA) was $611 Mil.
Selling, General & Admin. Expense(SGA) was $1,399 Mil.
Total Current Liabilities was $1,207 Mil.
Long-Term Debt was $92 Mil.
Net Income was 2050.033 + -309.517 + -514.861 + -443.447 = $782 Mil.
Non Operating Income was 1975.967 + -97.182 + -99.212 + -120.638 = $1,659 Mil.
Cash Flow from Operations was -83.902 + -170.855 + 167.457 + 6.874 = $-80 Mil.
|Accounts Receivable was $485 Mil.
Revenue was 586.914 + 955.781 + 1063.768 + 1085.633 = $3,692 Mil.
Gross Profit was 239.612 + 374.848 + 518.099 + 531.597 = $1,664 Mil.
Total Current Assets was $2,573 Mil.
Total Assets was $7,439 Mil.
Property, Plant and Equipment(Net PPE) was $3,260 Mil.
Depreciation, Depletion and Amortization(DDA) was $546 Mil.
Selling, General & Admin. Expense(SGA) was $1,710 Mil.
Total Current Liabilities was $7,462 Mil.
Long-Term Debt was $222 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)|
|=||(229.729 / 2965.592)||/||(485.185 / 3692.096)|
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)|
|=||(312.206 / 3692.096)||/||(190.76 / 2965.592)|
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 - (1150.842 + 693.62) / 3504.604)||/||(1 - (2572.977 + 3259.529) / 7438.786)|
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))|
|=||(545.506 / (545.506 + 3259.529))||/||(611.315 / (611.315 + 693.62))|
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)|
|=||(1398.706 / 2965.592)||/||(1709.754 / 3692.096)|
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)|
|=||((92.067 + 1207.162) / 3504.604)||/||((221.598 + 7461.628) / 7438.786)|
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|
|=||(782.208 - 1658.935||-||-80.426)||/||3504.604|
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 -3.43 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