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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.
Nuance Communications Inc has a M-score of -2.72 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Nuance Communications Inc was 48.41. The lowest was -3.92. And the median was -2.62.
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 * 1.0793||+||0.528 * 1.046||+||0.404 * 1.0374||+||0.892 * 1.0367||+||0.115 * 1.104|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9845||+||4.679 * -0.0868||-||0.327 * 0.9732|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $428 Mil.|
Revenue was 502.314 + 475.504 + 475.653 + 469.98 = $1,923 Mil.
Gross Profit was 292.251 + 259.411 + 265.289 + 262.16 = $1,079 Mil.
Total Current Assets was $1,165 Mil.
Total Assets was $5,820 Mil.
Property, Plant and Equipment(Net PPE) was $191 Mil.
Depreciation, Depletion and Amortization(DDA) was $222 Mil.
Selling, General & Admin. Expense(SGA) was $609 Mil.
Total Current Liabilities was $642 Mil.
Long-Term Debt was $2,127 Mil.
Net Income was -1.456 + -54.247 + -39.227 + -55.413 = $-150 Mil.
Non Operating Income was -0.32 + 0.363 + -0.274 + -3.096 = $-3 Mil.
Cash Flow from Operations was 95.934 + 97.031 + 87.026 + 78.156 = $358 Mil.
|Accounts Receivable was $383 Mil.
Revenue was 472.243 + 469.769 + 450.999 + 462.268 = $1,855 Mil.
Gross Profit was 273.508 + 275.711 + 259.814 + 279.696 = $1,089 Mil.
Total Current Assets was $1,410 Mil.
Total Assets was $5,959 Mil.
Property, Plant and Equipment(Net PPE) was $143 Mil.
Depreciation, Depletion and Amortization(DDA) was $209 Mil.
Selling, General & Admin. Expense(SGA) was $597 Mil.
Total Current Liabilities was $805 Mil.
Long-Term Debt was $2,108 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)|
|=||(428.266 / 1923.451)||/||(382.741 / 1855.279)|
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)|
|=||(259.411 / 1855.279)||/||(292.251 / 1923.451)|
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 - (1164.5 + 191.411) / 5820.284)||/||(1 - (1409.527 + 143.465) / 5958.603)|
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))|
|=||(208.659 / (208.659 + 143.465))||/||(221.776 / (221.776 + 191.411))|
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)|
|=||(609.207 / 1923.451)||/||(596.838 / 1855.279)|
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)|
|=||((2127.392 + 642.009) / 5820.284)||/||((2108.091 + 805.234) / 5958.603)|
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|
|=||(-150.343 - -3.327||-||358.147)||/||5820.284|
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 -2.72 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