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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 8 years, the highest Beneish M-Score of Nielsen Holdings PLC was -2.43. The lowest was -2.75. And the median was -2.57.
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 * 1.0673||+||0.528 * 0.9963||+||0.404 * 1.0116||+||0.892 * 1.0026||+||0.115 * 0.9648|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0059||+||4.679 * -0.0457||-||0.327 * 1.0482|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $1,313 Mil.|
Revenue was 1596 + 1487 + 1624 + 1531 = $6,238 Mil.
Gross Profit was 942 + 846 + 970 + 916 = $3,674 Mil.
Total Current Assets was $2,035 Mil.
Total Assets was $15,718 Mil.
Property, Plant and Equipment(Net PPE) was $478 Mil.
Depreciation, Depletion and Amortization(DDA) was $585 Mil.
Selling, General & Admin. Expense(SGA) was $1,908 Mil.
Total Current Liabilities was $2,415 Mil.
Long-Term Debt was $6,933 Mil.
Net Income was 113 + 100 + 251 + 142 = $606 Mil.
Non Operating Income was -4 + -1 + 202 + 5 = $202 Mil.
Cash Flow from Operations was 210 + 87 + 401 + 424 = $1,122 Mil.
|Accounts Receivable was $1,227 Mil.
Revenue was 1559 + 1458 + 1633 + 1572 = $6,222 Mil.
Gross Profit was 911 + 836 + 980 + 924 = $3,651 Mil.
Total Current Assets was $2,114 Mil.
Total Assets was $15,465 Mil.
Property, Plant and Equipment(Net PPE) was $508 Mil.
Depreciation, Depletion and Amortization(DDA) was $575 Mil.
Selling, General & Admin. Expense(SGA) was $1,892 Mil.
Total Current Liabilities was $1,633 Mil.
Long-Term Debt was $7,142 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)|
|=||(1313 / 6238)||/||(1227 / 6222)|
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)|
|=||(3651 / 6222)||/||(3674 / 6238)|
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 - (2035 + 478) / 15718)||/||(1 - (2114 + 508) / 15465)|
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))|
|=||(575 / (575 + 508))||/||(585 / (585 + 478))|
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)|
|=||(1908 / 6238)||/||(1892 / 6222)|
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)|
|=||((6933 + 2415) / 15718)||/||((7142 + 1633) / 15465)|
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|
|=||(606 - 202||-||1122)||/||15718|
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 -2.65 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