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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 9 years, the highest Beneish M-Score of Nielsen Holdings PLC was -2.43. The lowest was -2.78. And the median was -2.59.
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 * 0.9276||+||0.528 * 1.0031||+||0.404 * 0.9828||+||0.892 * 1.0222||+||0.115 * 0.9609|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9456||+||4.679 * -0.0506||-||0.327 * 1.0417|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $1,171 Mil.|
Revenue was 1656 + 1570 + 1596 + 1487 = $6,309 Mil.
Gross Profit was 986 + 928 + 942 + 846 = $3,702 Mil.
Total Current Assets was $2,222 Mil.
Total Assets was $15,730 Mil.
Property, Plant and Equipment(Net PPE) was $471 Mil.
Depreciation, Depletion and Amortization(DDA) was $603 Mil.
Selling, General & Admin. Expense(SGA) was $1,851 Mil.
Total Current Liabilities was $1,594 Mil.
Long-Term Debt was $7,738 Mil.
Net Income was 159 + 130 + 113 + 100 = $502 Mil.
Non Operating Income was 5 + 2 + -4 + -1 = $2 Mil.
Cash Flow from Operations was 543 + 456 + 210 + 87 = $1,296 Mil.
|Accounts Receivable was $1,235 Mil.
Revenue was 1624 + 1531 + 1559 + 1458 = $6,172 Mil.
Gross Profit was 970 + 916 + 911 + 836 = $3,633 Mil.
Total Current Assets was $1,908 Mil.
Total Assets was $15,303 Mil.
Property, Plant and Equipment(Net PPE) was $490 Mil.
Depreciation, Depletion and Amortization(DDA) was $574 Mil.
Selling, General & Admin. Expense(SGA) was $1,915 Mil.
Total Current Liabilities was $1,687 Mil.
Long-Term Debt was $7,028 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)|
|=||(1171 / 6309)||/||(1235 / 6172)|
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)|
|=||(3633 / 6172)||/||(3702 / 6309)|
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 - (2222 + 471) / 15730)||/||(1 - (1908 + 490) / 15303)|
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))|
|=||(574 / (574 + 490))||/||(603 / (603 + 471))|
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)|
|=||(1851 / 6309)||/||(1915 / 6172)|
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)|
|=||((7738 + 1594) / 15730)||/||((7028 + 1687) / 15303)|
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|
|=||(502 - 2||-||1296)||/||15730|
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 -2.78 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