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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 7 years, the highest Beneish M-Score of Nielsen Holdings PLC was -2.38. The lowest was -2.74. And the median was -2.51.
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 Nielsen Holdings PLC 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 * 0.9916||+||0.528 * 0.9837||+||0.404 * 0.9923||+||0.892 * 0.9864||+||0.115 * 0.9575|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9819||+||4.679 * -0.0414||-||0.327 * 1.1078|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $1,163 Mil.|
Revenue was 1531 + 1559 + 1458 + 1633 = $6,181 Mil.
Gross Profit was 916 + 911 + 836 + 980 = $3,643 Mil.
Total Current Assets was $2,106 Mil.
Total Assets was $15,277 Mil.
Property, Plant and Equipment(Net PPE) was $486 Mil.
Depreciation, Depletion and Amortization(DDA) was $580 Mil.
Selling, General & Admin. Expense(SGA) was $1,883 Mil.
Total Current Liabilities was $1,755 Mil.
Long-Term Debt was $7,114 Mil.
Net Income was 142 + 114 + 63 + 161 = $480 Mil.
Non Operating Income was 5 + -6 + -26 + -39 = $-66 Mil.
Cash Flow from Operations was 452 + 251 + 75 + 401 = $1,179 Mil.
|Accounts Receivable was $1,189 Mil.
Revenue was 1572 + 1594 + 1489 + 1611 = $6,266 Mil.
Gross Profit was 924 + 917 + 847 + 945 = $3,633 Mil.
Total Current Assets was $1,982 Mil.
Total Assets was $15,361 Mil.
Property, Plant and Equipment(Net PPE) was $525 Mil.
Depreciation, Depletion and Amortization(DDA) was $571 Mil.
Selling, General & Admin. Expense(SGA) was $1,944 Mil.
Total Current Liabilities was $1,542 Mil.
Long-Term Debt was $6,508 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)|
|=||(1163 / 6181)||/||(1189 / 6266)|
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)|
|=||(911 / 6266)||/||(916 / 6181)|
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 - (2106 + 486) / 15277)||/||(1 - (1982 + 525) / 15361)|
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))|
|=||(571 / (571 + 525))||/||(580 / (580 + 486))|
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)|
|=||(1883 / 6181)||/||(1944 / 6266)|
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)|
|=||((7114 + 1755) / 15277)||/||((6508 + 1542) / 15361)|
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|
|=||(480 - -66||-||1179)||/||15277|
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.
Nielsen Holdings PLC has a M-score of -2.74 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
Nielsen Holdings PLC Annual Data
Nielsen Holdings PLC Quarterly Data