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Nike Inc (NYSE:NKE)
Beneish M-Score
-2.63 (As of Today)

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.

Nike Inc has a M-score of -2.63 suggests that the company is not a manipulator.

NKE' s 10-Year Beneish M-Score Range
Min: -3.03   Max: -1.53
Current: -2.63

-3.03
-1.53

During the past 13 years, the highest Beneish M-Score of Nike Inc was -1.53. The lowest was -3.03. And the median was -2.55.


Definition

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 Nike 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 * 0.953+0.528 * 0.9769+0.404 * 0.9281+0.892 * 1.0893+0.115 * 0.8728
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9994+4.679 * -0.0123-0.327 * 1.235
=-2.63

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Feb14) TTM:Last Year (Feb13) TTM:
Accounts Receivable was $3,355 Mil.
Revenue was 6972 + 6431 + 6971 + 6697 = $27,071 Mil.
Gross Profit was 3103 + 2826 + 3132 + 2940 = $12,001 Mil.
Total Current Assets was $13,410 Mil.
Total Assets was $17,803 Mil.
Property, Plant and Equipment(Net PPE) was $2,736 Mil.
Depreciation, Depletion and Amortization(DDA) was $634 Mil.
Selling, General & Admin. Expense(SGA) was $8,332 Mil.
Total Current Liabilities was $3,954 Mil.
Long-Term Debt was $1,201 Mil.
Net Income was 685 + 537 + 780 + 668 = $2,670 Mil.
Non Operating Income was -45 + -13 + -28 + -43 = $-129 Mil.
Cash Flow from Operations was 754 + 332 + 597 + 1335 = $3,018 Mil.
Accounts Receivable was $3,232 Mil.
Revenue was 6187 + 5955 + 6474 + 6236 = $24,852 Mil.
Gross Profit was 2736 + 2530 + 2828 + 2669 = $10,763 Mil.
Total Current Assets was $11,789 Mil.
Total Assets was $15,615 Mil.
Property, Plant and Equipment(Net PPE) was $2,260 Mil.
Depreciation, Depletion and Amortization(DDA) was $444 Mil.
Selling, General & Admin. Expense(SGA) was $7,654 Mil.
Total Current Liabilities was $3,500 Mil.
Long-Term Debt was $161 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(3355 / 27071) / (3232 / 24852)
=0.12393336 / 0.1300499
=0.953

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(2826 / 24852) / (3103 / 27071)
=0.43308386 / 0.44331573
=0.9769

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (13410 + 2736) / 17803) / (1 - (11789 + 2260) / 15615)
=0.0930742 / 0.10028818
=0.9281

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=27071 / 24852
=1.0893

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))
=(444 / (444 + 2260)) / (634 / (634 + 2736))
=0.16420118 / 0.18813056
=0.8728

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)
=(8332 / 27071) / (7654 / 24852)
=0.30778324 / 0.30798326
=0.9994

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)
=((1201 + 3954) / 17803) / ((161 + 3500) / 15615)
=0.28955794 / 0.23445405
=1.235

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(2670 - -129 - 3018) / 17803
=-0.0123

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.

Nike Inc has a M-score of -2.63 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Nike Inc Annual Data

May05May06May07May08May09May10May11May12May13May14
DSRI 0.95150.97310.95380.98211.00220.92671.11930.86060.9173
GMI 0.9631.01051.00420.97411.00350.96951.01181.05170.9978
AQI 0.97940.90821.01071.57560.85440.90140.99780.86280.9387
SGI 1.12131.08841.09171.14091.02950.99151.0581.15981.085
DEPI 1.07171.01781.07660.95430.88740.96251.17510.93430.8955
SGAI 1.0170.97451.02871.03771.00331.03750.95040.95771.015
LVGI 0.89061.00620.91121.07960.9270.94261.06840.94141.099
TATA -0.0375-0.0275-0.0363-0.0036-0.0255-0.09060.02310.0175-0.03
M-score -2.58-2.58-2.57-2.21-2.62-3.03-2.20-2.39-2.69

Nike Inc Quarterly Data

Feb12May12Aug12Nov12Feb13May13Aug13Nov13Feb14May14
DSRI 0.99870.85370.91990.91780.880.92470.8660.9310.9531.0032
GMI 1.05581.05231.03891.0271.01480.99720.98610.97660.97690.9736
AQI 0.99120.86281.0340.85330.89540.93870.75990.90320.92811.2961
SGI 1.10561.16911.13741.11941.11421.07631.07941.08081.08931.0982
DEPI 1.00870.93430.9990.860.97050.89550.92371.01070.87281.1945
SGAI 0.91030.96250.99841.01031.0251.00990.97450.99060.99941.025
LVGI 0.98430.94140.98041.00350.95321.0991.08341.08361.2351.1464
TATA 0.03930.0175-0.0199-0.0404-0.0256-0.03-0.01810.0135-0.01230.0602
M-score -2.16-2.39-2.48-2.70-2.64-2.69-2.75-2.48-2.63-2.03
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