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Nike Inc (NYSE:NKE)
Beneish M-Score
-2.75 (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 -2.75 suggests that the company is not a manipulator.

NKE' s 10-Year Beneish M-Score Range
Min: -3.03   Max: -1.53
Current: -2.75

-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 -2.54.


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 * 0.8787+0.528 * 0.9675+0.404 * 1.293+0.892 * 1.1173+0.115 * 0.9037
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0438+4.679 * -0.0658-0.327 * 1.1211
=-2.75

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

This Year (Feb15) TTM:Last Year (Feb14) TTM:
Accounts Receivable was $3,294 Mil.
Revenue was 7460 + 7380 + 7982 + 7425 = $30,247 Mil.
Gross Profit was 3426 + 3327 + 3721 + 3385 = $13,859 Mil.
Total Current Assets was $15,207 Mil.
Total Assets was $20,541 Mil.
Property, Plant and Equipment(Net PPE) was $2,862 Mil.
Depreciation, Depletion and Amortization(DDA) was $682 Mil.
Selling, General & Admin. Expense(SGA) was $9,745 Mil.
Total Current Liabilities was $5,586 Mil.
Long-Term Debt was $1,082 Mil.
Net Income was 791 + 655 + 962 + 698 = $3,106 Mil.
Non Operating Income was -5 + -2 + -3 + -189 = $-199 Mil.
Cash Flow from Operations was 2103 + 647 + 588 + 1318 = $4,656 Mil.
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 $576 Mil.
Selling, General & Admin. Expense(SGA) was $8,356 Mil.
Total Current Liabilities was $3,954 Mil.
Long-Term Debt was $1,201 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)
=(3294 / 30247) / (3355 / 27071)
=0.10890336 / 0.12393336
=0.8787

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)
=(3327 / 27071) / (3426 / 30247)
=0.44331573 / 0.4581942
=0.9675

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 - (15207 + 2862) / 20541) / (1 - (13410 + 2736) / 17803)
=0.12034468 / 0.0930742
=1.293

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
=30247 / 27071
=1.1173

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))
=(576 / (576 + 2736)) / (682 / (682 + 2862))
=0.17391304 / 0.19243792
=0.9037

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)
=(9745 / 30247) / (8356 / 27071)
=0.32218071 / 0.30866979
=1.0438

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)
=((1082 + 5586) / 20541) / ((1201 + 3954) / 17803)
=0.32461905 / 0.28955794
=1.1211

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
=(3106 - -199 - 4656) / 20541
=-0.0658

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 -2.75 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

May06May07May08May09May10May11May12May13May14May15
DSRI 0.97310.95380.98211.00220.92671.11930.86060.91731.0032
GMI 1.01051.00420.97411.00350.96951.01181.05170.99780.9736
AQI 0.90821.01071.57560.85440.90140.99780.86280.91391.3312
SGI 1.08841.09171.14091.02950.99151.0581.15981.0851.0982
DEPI 1.01781.07660.95430.88740.96251.17510.93430.90870.9351
SGAI 0.97451.02871.03771.00331.03750.95040.95771.01711.0239
LVGI 1.00620.91121.07960.9270.94261.06840.94141.10921.1359
TATA -0.0275-0.0363-0.0036-0.0255-0.09060.02310.0175-0.0291-0.0111
M-score -2.58-2.57-2.21-2.62-3.03-2.20-2.39-2.70-2.38

Nike Inc Quarterly Data

Feb13May13Aug13Nov13Feb14May14Aug14Nov14Feb15May15
DSRI 0.880.92470.8660.9310.9531.00321.0020.95190.87870.8883
GMI 1.01480.99720.98610.97660.97690.97360.97090.9730.96750.9739
AQI 0.89540.91390.75990.90320.92811.33121.3281.30861.2931.0898
SGI 1.11421.07631.07941.08081.08931.09821.11621.13211.11731.1008
DEPI 0.97050.90870.93841.02950.94420.93510.99241.01430.90371.3238
SGAI 1.0251.01190.97670.99321.00221.02391.0561.04621.04381.0251
LVGI 0.95321.10921.08341.08361.2351.13591.13081.1081.12111.025
TATA -0.0256-0.0291-0.01840.0131-0.017-0.00670.0034-0.0075-0.0658-0.0052
M-score -2.64-2.70-2.75-2.48-2.65-2.36-2.29-2.37-2.75-2.47
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