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Nielsen NV (NYSE:NLSN)
Beneish M-Score
-2.46 (As of Today)

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.

Nielsen NV has a M-score of -2.46 suggests that the company is not a manipulator.

NLSN' s 10-Year Beneish M-Score Range
Min: -2.61   Max: -2.42
Current: -2.46

-2.61
-2.42

During the past 6 years, the highest Beneish M-Score of Nielsen NV was -2.42. The lowest was -2.61. And the median was -2.53.


Definition

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 NV 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 * 1.0653+0.528 * 1.0166+0.404 * 1.0631+0.892 * 1.0765+0.115 * 0.9687
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.003+4.679 * -0.0285-0.327 * 1.0106
=-2.46

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $1,266 Mil.
Revenue was 1594 + 1489 + 1611 + 1387 = $6,081 Mil.
Gross Profit was 917 + 847 + 945 + 814 = $3,523 Mil.
Total Current Assets was $1,987 Mil.
Total Assets was $15,556 Mil.
Property, Plant and Equipment(Net PPE) was $530 Mil.
Depreciation, Depletion and Amortization(DDA) was $549 Mil.
Selling, General & Admin. Expense(SGA) was $1,910 Mil.
Total Current Liabilities was $1,503 Mil.
Long-Term Debt was $6,556 Mil.
Net Income was 74 + 58 + 145 + 134 = $411 Mil.
Non Operating Income was -51 + -30 + -11 + 5 = $-87 Mil.
Cash Flow from Operations was 210 + 90 + 320 + 321 = $941 Mil.
Accounts Receivable was $1,104 Mil.
Revenue was 1386 + 1376 + 1464 + 1423 = $5,649 Mil.
Gross Profit was 806 + 783 + 880 + 858 = $3,327 Mil.
Total Current Assets was $2,541 Mil.
Total Assets was $14,540 Mil.
Property, Plant and Equipment(Net PPE) was $535 Mil.
Depreciation, Depletion and Amortization(DDA) was $520 Mil.
Selling, General & Admin. Expense(SGA) was $1,769 Mil.
Total Current Liabilities was $1,534 Mil.
Long-Term Debt was $5,920 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(1266 / 6081) / (1104 / 5649)
=0.20818944 / 0.19543282
=1.0653

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(847 / 5649) / (917 / 6081)
=0.5889538 / 0.5793455
=1.0166

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (1987 + 530) / 15556) / (1 - (2541 + 535) / 14540)
=0.83819748 / 0.78844567
=1.0631

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=6081 / 5649
=1.0765

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))
=(520 / (520 + 535)) / (549 / (549 + 530))
=0.492891 / 0.50880445
=0.9687

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)
=(1910 / 6081) / (1769 / 5649)
=0.31409308 / 0.31315277
=1.003

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)
=((6556 + 1503) / 15556) / ((5920 + 1534) / 14540)
=0.51806377 / 0.51265475
=1.0106

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(411 - -87 - 941) / 15556
=-0.0285

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 NV has a M-score of -2.46 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Nielsen NV Annual Data

Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.01311.0603
GMI 1.00261.0251
AQI 1.00410.9762
SGI 1.01451.0162
DEPI 0.96550.999
SGAI 0.92831.0045
LVGI 0.95480.9447
TATA -0.0258-0.0082
M-score -2.55-2.43

Nielsen NV Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.99580.9241.00961.01311.00390.99761.04641.04981.061.0653
GMI 0.98660.98930.99681.00261.00641.01161.01651.02211.01851.0166
AQI 0.99591.00571.00151.00411.00780.93180.97440.97620.98791.0631
SGI 1.06461.03751.01591.01451.0141.01621.00791.02641.03981.0765
DEPI 1.05161.01471.01180.96550.94120.96221.01420.9990.97740.9687
SGAI 0.9430.93920.92740.92830.97410.97310.98430.99951.00831.003
LVGI 0.96430.96310.94870.95480.92790.90610.94960.94470.98141.0106
TATA -0.0268-0.0246-0.0288-0.0258-0.0287-0.0118-0.0088-0.0082-0.0087-0.0285
M-score -2.53-2.61-2.56-2.55-2.57-2.51-2.45-2.43-2.42-2.46
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