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Nielsen NV (NYSE:NLSN)
Beneish M-Score
-2.43 (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 -2.43 suggests that the company is not a manipulator.

NLSN' s 10-Year Beneish M-Score Range
Min: -2.61   Max: -2.43
Current: -2.43

-2.61
-2.43

During the past 6 years, the highest Beneish M-Score of Nielsen NV was -2.43. The lowest was -2.61. And the median was -2.54.


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 * 1.0234+0.528 * 1.0098+0.404 * 0.9879+0.892 * 1.077+0.115 * 0.9774
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0005+4.679 * -0.0087-0.327 * 0.9814
=-2.43

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $1,186 Mil.
Revenue was 1489 + 1611 + 1387 + 1386 = $5,873 Mil.
Gross Profit was 847 + 945 + 814 + 806 = $3,412 Mil.
Total Current Assets was $1,933 Mil.
Total Assets was $15,473 Mil.
Property, Plant and Equipment(Net PPE) was $530 Mil.
Depreciation, Depletion and Amortization(DDA) was $534 Mil.
Selling, General & Admin. Expense(SGA) was $1,862 Mil.
Total Current Liabilities was $1,531 Mil.
Long-Term Debt was $6,461 Mil.
Net Income was 58 + 145 + 134 + 426 = $763 Mil.
Non Operating Income was -30 + -11 + 5 + -4 = $-40 Mil.
Cash Flow from Operations was 90 + 320 + 321 + 206 = $937 Mil.
Accounts Receivable was $1,076 Mil.
Revenue was 1319 + 1441 + 1351 + 1342 = $5,453 Mil.
Gross Profit was 740 + 865 + 801 + 793 = $3,199 Mil.
Total Current Assets was $1,609 Mil.
Total Assets was $14,416 Mil.
Property, Plant and Equipment(Net PPE) was $537 Mil.
Depreciation, Depletion and Amortization(DDA) was $517 Mil.
Selling, General & Admin. Expense(SGA) was $1,728 Mil.
Total Current Liabilities was $1,639 Mil.
Long-Term Debt was $5,948 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)
=(1186 / 5873) / (1076 / 5453)
=0.20194109 / 0.19732257
=1.0234

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)
=(945 / 5453) / (847 / 5873)
=0.58664955 / 0.58096373
=1.0098

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 - (1933 + 530) / 15473) / (1 - (1609 + 537) / 14416)
=0.84081949 / 0.85113762
=0.9879

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
=5873 / 5453
=1.077

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))
=(517 / (517 + 537)) / (534 / (534 + 530))
=0.49051233 / 0.5018797
=0.9774

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)
=(1862 / 5873) / (1728 / 5453)
=0.3170441 / 0.31688979
=1.0005

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)
=((6461 + 1531) / 15473) / ((5948 + 1639) / 14416)
=0.51651263 / 0.52629023
=0.9814

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
=(763 - -40 - 937) / 15473
=-0.0087

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 -2.43 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 1.05151.0216
GMI 1.01211.0155
AQI 1.00410.9762
SGI 0.97741.0547
DEPI 0.96550.999
SGAI 0.93420.9981
LVGI 0.95480.9447
TATA -0.0258-0.0082
M-score -2.54-2.43

Nielsen NV Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 0.99690.93221.03211.03981.03871.01621.03851.03311.0234
GMI 0.9870.99041.00241.00861.01471.01851.01431.0191.0098
AQI 0.99591.00571.00151.00411.00780.93180.97440.97620.9879
SGI 1.06351.02840.99380.98840.98010.99761.01561.0431.077
DEPI 1.05161.01471.01180.96550.94120.96221.01420.9990.9774
SGAI 0.94090.93750.92980.92860.98390.9820.98461.00421.0005
LVGI 0.96430.96310.94870.95480.92790.90610.94960.94470.9814
TATA -0.0268-0.0246-0.0288-0.0258-0.0287-0.0118-0.0088-0.0082-0.0087
M-score -2.53-2.61-2.56-2.55-2.57-2.51-2.45-2.43-2.43
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