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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 Nike Inc was -1.85. The lowest was -3.03. And the median was -2.54.
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 * 0.9462||+||0.528 * 1.0204||+||0.404 * 1.1823||+||0.892 * 1.0695||+||0.115 * 1.0286|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9926||+||4.679 * -0.0005||-||0.327 * 1.1443|
|This Year (Nov16) TTM:||Last Year (Nov15) TTM:|
|Accounts Receivable was $3,478 Mil.|
Revenue was 8180 + 9061 + 8244 + 8032 = $33,517 Mil.
Gross Profit was 3616 + 4123 + 3786 + 3689 = $15,214 Mil.
Total Current Assets was $16,011 Mil.
Total Assets was $22,652 Mil.
Property, Plant and Equipment(Net PPE) was $3,566 Mil.
Depreciation, Depletion and Amortization(DDA) was $698 Mil.
Selling, General & Admin. Expense(SGA) was $10,734 Mil.
Total Current Liabilities was $5,225 Mil.
Long-Term Debt was $3,473 Mil.
Net Income was 842 + 1249 + 846 + 950 = $3,887 Mil.
Non Operating Income was 18 + 62 + 58 + 17 = $155 Mil.
Cash Flow from Operations was 963 + 721 + 1184 + 876 = $3,744 Mil.
|Accounts Receivable was $3,437 Mil.
Revenue was 7686 + 8414 + 7779 + 7460 = $31,339 Mil.
Gross Profit was 3501 + 3995 + 3593 + 3426 = $14,515 Mil.
Total Current Assets was $16,755 Mil.
Total Assets was $22,583 Mil.
Property, Plant and Equipment(Net PPE) was $3,235 Mil.
Depreciation, Depletion and Amortization(DDA) was $655 Mil.
Selling, General & Admin. Expense(SGA) was $10,111 Mil.
Total Current Liabilities was $5,511 Mil.
Long-Term Debt was $2,067 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)|
|=||(3478 / 33517)||/||(3437 / 31339)|
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)|
|=||(14515 / 31339)||/||(15214 / 33517)|
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 - (16011 + 3566) / 22652)||/||(1 - (16755 + 3235) / 22583)|
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))|
|=||(655 / (655 + 3235))||/||(698 / (698 + 3566))|
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)|
|=||(10734 / 33517)||/||(10111 / 31339)|
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)|
|=||((3473 + 5225) / 22652)||/||((2067 + 5511) / 22583)|
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|
|=||(3887 - 155||-||3744)||/||22652|
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 -2.43 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
Nike Inc Annual Data
Nike Inc Quarterly Data