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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 -2.53.
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 * 1.1537||+||0.528 * 0.7887||+||0.404 * 0.9744||+||0.892 * 0.6314||+||0.115 * 1.5058|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0136||+||4.679 * -0.0796||-||0.327 * 0.9913|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $167 Mil.|
Revenue was 249.213 + 226.557 + 244.782 + 284.652 = $1,005 Mil.
Gross Profit was 158.442 + 125.367 + 125.512 + 144.166 = $553 Mil.
Total Current Assets was $924 Mil.
Total Assets was $2,847 Mil.
Property, Plant and Equipment(Net PPE) was $609 Mil.
Depreciation, Depletion and Amortization(DDA) was $166 Mil.
Selling, General & Admin. Expense(SGA) was $574 Mil.
Total Current Liabilities was $947 Mil.
Long-Term Debt was $99 Mil.
Net Income was -9.871 + -36.588 + -84.582 + -189.421 = $-320 Mil.
Non Operating Income was 40.687 + 36.771 + 2.633 + -103.546 = $-23 Mil.
Cash Flow from Operations was 26.19 + -18.16 + -13.594 + -64.891 = $-70 Mil.
|Accounts Receivable was $230 Mil.
Revenue was 320.303 + 363.408 + 432.005 + 476.264 = $1,592 Mil.
Gross Profit was 128.951 + 177.532 + 168.2 + 216.646 = $691 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 $331 Mil.
Selling, General & Admin. Expense(SGA) was $897 Mil.
Total Current Liabilities was $1,207 Mil.
Long-Term Debt was $92 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)|
|=||(167.353 / 1005.204)||/||(229.729 / 1591.98)|
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)|
|=||(691.329 / 1591.98)||/||(553.487 / 1005.204)|
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 - (924.2 + 608.556) / 2846.858)||/||(1 - (1150.842 + 693.62) / 3504.604)|
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))|
|=||(330.924 / (330.924 + 693.62))||/||(166.183 / (166.183 + 608.556))|
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)|
|=||(574.156 / 1005.204)||/||(897.153 / 1591.98)|
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)|
|=||((99.17 + 947.039) / 2846.858)||/||((92.067 + 1207.162) / 3504.604)|
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|
|=||(-320.462 - -23.455||-||-70.455)||/||2846.858|
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 -3.10 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