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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 -4.70. 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 * 0.3154||+||0.528 * 1.1057||+||0.404 * 2.2405||+||0.892 * 1.2136||+||0.115 * 0.2781|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9365||+||4.679 * -0.1599||-||0.327 * 0.8327|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $179 Mil.|
Revenue was 284.652 + 420.765 + 763.869 + 2271.771 = $3,741 Mil.
Gross Profit was 144.166 + 190.76 + 312.206 + 833.691 = $1,481 Mil.
Total Current Assets was $818 Mil.
Total Assets was $2,843 Mil.
Property, Plant and Equipment(Net PPE) was $564 Mil.
Depreciation, Depletion and Amortization(DDA) was $573 Mil.
Selling, General & Admin. Expense(SGA) was $1,700 Mil.
Total Current Liabilities was $897 Mil.
Long-Term Debt was $88 Mil.
Net Income was -189.421 + 2050.033 + -309.517 + -514.861 = $1,036 Mil.
Non Operating Income was -103.546 + 1975.967 + -97.182 + -132.339 = $1,643 Mil.
Cash Flow from Operations was -64.891 + -83.902 + -170.855 + 167.457 = $-152 Mil.
|Accounts Receivable was $468 Mil.
Revenue was 476.264 + 586.914 + 955.781 + 1063.768 = $3,083 Mil.
Gross Profit was 216.646 + 239.612 + 374.848 + 518.099 = $1,349 Mil.
Total Current Assets was $2,011 Mil.
Total Assets was $6,246 Mil.
Property, Plant and Equipment(Net PPE) was $2,801 Mil.
Depreciation, Depletion and Amortization(DDA) was $457 Mil.
Selling, General & Admin. Expense(SGA) was $1,496 Mil.
Total Current Liabilities was $2,277 Mil.
Long-Term Debt was $319 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)|
|=||(179.316 / 3741.057)||/||(468.465 / 3082.727)|
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)|
|=||(190.76 / 3082.727)||/||(144.166 / 3741.057)|
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 - (817.697 + 563.595) / 2842.79)||/||(1 - (2011.263 + 2801.283) / 6245.67)|
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))|
|=||(456.841 / (456.841 + 2801.283))||/||(573.273 / (573.273 + 563.595))|
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)|
|=||(1699.877 / 3741.057)||/||(1495.704 / 3082.727)|
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)|
|=||((87.51 + 896.532) / 2842.79)||/||((318.948 + 2277.383) / 6245.67)|
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|
|=||(1036.234 - 1642.9||-||-152.191)||/||2842.79|
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 -3.13 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