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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 NV was -2.43. The lowest was -2.62. And the median was -2.58.
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 * 0.9411||+||0.528 * 0.9935||+||0.404 * 1.0091||+||0.892 * 1.1026||+||0.115 * 0.9303|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9579||+||4.679 * -0.035||-||0.327 * 1.0397|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $1,241 Mil.|
Revenue was 1633 + 1572 + 1594 + 1489 = $6,288 Mil.
Gross Profit was 980 + 924 + 917 + 847 = $3,668 Mil.
Total Current Assets was $2,019 Mil.
Total Assets was $15,376 Mil.
Property, Plant and Equipment(Net PPE) was $533 Mil.
Depreciation, Depletion and Amortization(DDA) was $573 Mil.
Selling, General & Admin. Expense(SGA) was $1,917 Mil.
Total Current Liabilities was $1,798 Mil.
Long-Term Debt was $6,465 Mil.
Net Income was 161 + 91 + 74 + 58 = $384 Mil.
Non Operating Income was -39 + -51 + -51 + -30 = $-171 Mil.
Cash Flow from Operations was 401 + 392 + 210 + 90 = $1,093 Mil.
|Accounts Receivable was $1,196 Mil.
Revenue was 1611 + 1387 + 1386 + 1319 = $5,703 Mil.
Gross Profit was 945 + 814 + 806 + 740 = $3,305 Mil.
Total Current Assets was $2,134 Mil.
Total Assets was $15,530 Mil.
Property, Plant and Equipment(Net PPE) was $560 Mil.
Depreciation, Depletion and Amortization(DDA) was $521 Mil.
Selling, General & Admin. Expense(SGA) was $1,815 Mil.
Total Current Liabilities was $1,535 Mil.
Long-Term Debt was $6,492 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)|
|=||(1241 / 6288)||/||(1196 / 5703)|
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)|
|=||(924 / 5703)||/||(980 / 6288)|
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 - (2019 + 533) / 15376)||/||(1 - (2134 + 560) / 15530)|
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))|
|=||(521 / (521 + 560))||/||(573 / (573 + 533))|
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)|
|=||(1917 / 6288)||/||(1815 / 5703)|
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)|
|=||((6465 + 1798) / 15376)||/||((6492 + 1535) / 15530)|
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|
|=||(384 - -171||-||1093)||/||15376|
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 -2.62 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 NV Annual Data
Nielsen NV Quarterly Data