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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 13 years, the highest Beneish M-Score of Nuance Communications Inc was 10000000.00. The lowest was -10000000.00. And the median was -2.60.
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 Nuance Communications Inc 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 * 0.9851||+||0.528 * 0.9969||+||0.404 * 0.9778||+||0.892 * 1.0091||+||0.115 * 0.9809|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9247||+||4.679 * -0.1119||-||0.327 * 1.1695|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $363 Mil.|
Revenue was 477.851 + 478.733 + 486.115 + 504.119 = $1,947 Mil.
Gross Profit was 269.973 + 273.233 + 280.206 + 291.587 = $1,115 Mil.
Total Current Assets was $1,045 Mil.
Total Assets was $5,477 Mil.
Property, Plant and Equipment(Net PPE) was $187 Mil.
Depreciation, Depletion and Amortization(DDA) was $232 Mil.
Selling, General & Admin. Expense(SGA) was $564 Mil.
Total Current Liabilities was $668 Mil.
Long-Term Debt was $2,443 Mil.
Net Income was -11.821 + -7.046 + -12.065 + -11.027 = $-42 Mil.
Non Operating Income was -0.489 + 0.006 + -6.801 + -0.182 = $-7 Mil.
Cash Flow from Operations was 125.864 + 159.922 + 141.141 + 151.607 = $579 Mil.
|Accounts Receivable was $366 Mil.
Revenue was 477.939 + 475.059 + 474.019 + 502.314 = $1,929 Mil.
Gross Profit was 273.539 + 272.083 + 263.634 + 292.251 = $1,102 Mil.
Total Current Assets was $966 Mil.
Total Assets was $5,589 Mil.
Property, Plant and Equipment(Net PPE) was $192 Mil.
Depreciation, Depletion and Amortization(DDA) was $228 Mil.
Selling, General & Admin. Expense(SGA) was $604 Mil.
Total Current Liabilities was $601 Mil.
Long-Term Debt was $2,114 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)|
|=||(363.476 / 1946.818)||/||(365.661 / 1929.331)|
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)|
|=||(1101.507 / 1929.331)||/||(1114.999 / 1946.818)|
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 - (1044.753 + 186.561) / 5477.393)||/||(1 - (966.221 + 191.814) / 5589.021)|
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))|
|=||(228.388 / (228.388 + 191.814))||/||(231.846 / (231.846 + 186.561))|
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)|
|=||(563.549 / 1946.818)||/||(603.944 / 1929.331)|
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)|
|=||((2443.126 + 668.255) / 5477.393)||/||((2113.741 + 600.817) / 5589.021)|
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|
|=||(-41.959 - -7.466||-||578.534)||/||5477.393|
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.
Nuance Communications Inc has a M-score of -3.06 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
Nuance Communications Inc Annual Data
Nuance Communications Inc Quarterly Data