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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.
Nike Inc has a M-score of -2.21 signals that the company is a manipulator.
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.
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 * 0.9519||+||0.528 * 0.973||+||0.404 * 1.3086||+||0.892 * 1.1321||+||0.115 * 1.2808|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0463||+||4.679 * 0.0211||-||0.327 * 1.108|
|This Year (Nov14) TTM:||Last Year (Nov13) TTM:|
|Accounts Receivable was $3,457 Mil.|
Revenue was 7380 + 7982 + 7425 + 6972 = $29,759 Mil.
Gross Profit was 3327 + 3721 + 3385 + 3103 = $13,536 Mil.
Total Current Assets was $14,033 Mil.
Total Assets was $19,167 Mil.
Property, Plant and Equipment(Net PPE) was $2,927 Mil.
Depreciation, Depletion and Amortization(DDA) was $445 Mil.
Selling, General & Admin. Expense(SGA) was $9,532 Mil.
Total Current Liabilities was $4,937 Mil.
Long-Term Debt was $1,084 Mil.
Net Income was 655 + 962 + 698 + 685 = $3,000 Mil.
Non Operating Income was -2 + -3 + -17 + -45 = $-67 Mil.
Cash Flow from Operations was 0 + 588 + 1320 + 754 = $2,662 Mil.
|Accounts Receivable was $3,208 Mil.
Revenue was 6431 + 6971 + 6697 + 6187 = $26,286 Mil.
Gross Profit was 2826 + 3132 + 2940 + 2736 = $11,634 Mil.
Total Current Assets was $13,607 Mil.
Total Assets was $17,820 Mil.
Property, Plant and Equipment(Net PPE) was $2,645 Mil.
Depreciation, Depletion and Amortization(DDA) was $538 Mil.
Selling, General & Admin. Expense(SGA) was $8,047 Mil.
Total Current Liabilities was $3,851 Mil.
Long-Term Debt was $1,201 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)|
|=||(3457 / 29759)||/||(3208 / 26286)|
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)|
|=||(3721 / 26286)||/||(3327 / 29759)|
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 - (14033 + 2927) / 19167)||/||(1 - (13607 + 2645) / 17820)|
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))|
|=||(538 / (538 + 2645))||/||(445 / (445 + 2927))|
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)|
|=||(9532 / 29759)||/||(8047 / 26286)|
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)|
|=||((1084 + 4937) / 19167)||/||((1201 + 3851) / 17820)|
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|
|=||(3000 - -67||-||2662)||/||19167|
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 -2.21 signals that the company is likely to 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