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GuruFocus has detected 2 Warning Signs with Nokia Oyj $NOK.
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Nokia Oyj (NYSE:NOK)
Beneish M-Score
-1.36 (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.

Nokia Oyj has a M-score of -1.37 signals that the company is a manipulator.

NOK' s Beneish M-Score Range Over the Past 10 Years
Min: -3.87   Max: 316315.23
Current: -1.36

-3.87
316315.23

During the past 13 years, the highest Beneish M-Score of Nokia Oyj was 316315.23. The lowest was -3.87. And the median was -2.21.


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 Nokia Oyj 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 * 1.1775+0.528 * 1.1695+0.404 * 1.3632+0.892 * 1.6169+0.115 * 0.4926
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.2128+4.679 * 0.0443-0.327 * 0.8639
=-1.37

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $7,222 Mil.
Revenue was 6610.54994388 + 6273.03370787 + 6123.60801782 + 3931.37254902 = $22,939 Mil.
Gross Profit was 2487.09315376 + 2278.65168539 + 1730.51224944 + 1844.22657952 = $8,340 Mil.
Total Current Assets was $22,897 Mil.
Total Assets was $48,719 Mil.
Property, Plant and Equipment(Net PPE) was $2,154 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,416 Mil.
Selling, General & Admin. Expense(SGA) was $3,740 Mil.
Total Current Liabilities was $14,054 Mil.
Long-Term Debt was $3,948 Mil.
Net Income was -140.291806958 + -747.191011236 + -571.269487751 + 1949.89106754 = $491 Mil.
Non Operating Income was 3.367003367 + 1.12359550562 + 2.2271714922 + 19.6078431373 = $26 Mil.
Cash Flow from Operations was 262.626262626 + -692.134831461 + -1762.80623608 + 501.089324619 = $-1,691 Mil.
Accounts Receivable was $3,793 Mil.
Revenue was 3407.40740741 + 3276.09427609 + 3176.40692641 + 4326.75709001 = $14,187 Mil.
Gross Profit was 1476.99214366 + 1507.29517396 + 1281.38528139 + 1766.95437731 = $6,033 Mil.
Total Current Assets was $14,082 Mil.
Total Assets was $23,043 Mil.
Property, Plant and Equipment(Net PPE) was $749 Mil.
Depreciation, Depletion and Amortization(DDA) was $182 Mil.
Selling, General & Admin. Expense(SGA) was $1,907 Mil.
Total Current Liabilities was $6,824 Mil.
Long-Term Debt was $3,033 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)
=(7222.22222222 / 22938.5642186) / (3793.49046016 / 14186.6656999)
=0.31485067 / 0.26739831
=1.1775

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)
=(6032.62697632 / 14186.6656999) / (8340.48366812 / 22938.5642186)
=0.42523219 / 0.36360095
=1.1695

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 - (22896.7452301 + 2153.75982043) / 48719.4163861) / (1 - (14081.9304153 + 748.59708193) / 23042.6487093)
=0.48582091 / 0.3563879
=1.3632

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
=22938.5642186 / 14186.6656999
=1.6169

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))
=(181.818181818 / (181.818181818 + 748.59708193)) / (1416.45532317 / (1416.45532317 + 2153.75982043))
=0.19541616 / 0.39674229
=0.4926

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)
=(3740.10787259 / 22938.5642186) / (1907.30435706 / 14186.6656999)
=0.16304891 / 0.13444346
=1.2128

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)
=((3948.37261504 + 14053.8720539) / 48719.4163861) / ((3032.54769921 + 6823.79349046) / 23042.6487093)
=0.36950863 / 0.42774341
=0.8639

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
=(491.138761593 - 26.3256135021 - -1691.2254803) / 48719.4163861
=0.0443

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.

Nokia Oyj has a M-score of -1.37 signals that the company is likely to 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 local exchange's currency.

Nokia Oyj Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.91581.53430.84771.04560.91582.52160.80150.68231.18571.0735
GMI 1.07710.96150.98771.05861.07180.86720.96460.9180.94250.9563
AQI 1.25891.58311.93480.87650.89030.95851.06981.63320.73150.6698
SGI 1.34031.36820.92210.87180.93980.37420.96190.79950.89760.9388
DEPI 1.00730.79650.88590.88121.03591.04140.95410.85491.91890.93
SGAI 0.9271.12181.02871.10930.94921.24760.91250.9390.98251.0699
LVGI 1.04791.12781.05081.02421.01411.06231.05690.80880.92630.8586
TATA -0.009-0.01910.0198-0.0668-0.0748-0.0615-0.0844-0.0250.10720.0955
M-score -2.15-1.62-2.26-2.92-2.96-2.07-3.09-2.80-1.90-2.15

Nokia Oyj Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 0.48420.18531.04290.96790.98680.96391.16841.74121.37641.1775
GMI 1.58793.53480.91240.97320.9670.95620.97121.06881.13691.1695
AQI 0.97171.11340.73150.71991.271.14180.66981.33881.36581.3632
SGI 1.73394.57111.02051.01280.97610.93510.86261.08131.33721.6169
DEPI 0001.24832.19210.97950.72580.41780.28970.4926
SGAI 1.2992.59921.00850.99561.02951.10371.12031.26331.24981.2128
LVGI 0.82740.68330.92630.95990.88010.90380.85860.76860.84770.8639
TATA 0.07230.09750.11570.14820.08060.04460.09250.0560.04220.0443
M-score -1.771.51-2.13-1.89-1.87-2.32-2.17-1.33-1.49-1.37
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