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GuruFocus has detected 1 Warning Sign with Nuance Communications Inc $NUAN.
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Nuance Communications Inc (NAS:NUAN)
Beneish M-Score
-2.97 (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.

Nuance Communications Inc has a M-score of -2.97 suggests that the company is not a manipulator.

NUAN' s Beneish M-Score Range Over the Past 10 Years
Min: -10000000   Max: 10000000
Current: -2.97

-10000000
10000000

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.


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 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 * 1.0237+0.528 * 1.0082+0.404 * 0.9205+0.892 * 1.0037+0.115 * 1.0463
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9681+4.679 * -0.0923-0.327 * 1.1999
=-2.97

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

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $385 Mil.
Revenue was 487.658 + 506.204 + 477.851 + 478.733 = $1,950 Mil.
Gross Profit was 275.248 + 295.68 + 269.973 + 273.233 = $1,114 Mil.
Total Current Assets was $1,574 Mil.
Total Assets was $6,195 Mil.
Property, Plant and Equipment(Net PPE) was $178 Mil.
Depreciation, Depletion and Amortization(DDA) was $231 Mil.
Selling, General & Admin. Expense(SGA) was $560 Mil.
Total Current Liabilities was $1,698 Mil.
Long-Term Debt was $1,961 Mil.
Net Income was -23.929 + 18.474 + -11.821 + -7.046 = $-24 Mil.
Non Operating Income was -0.61 + -1.206 + -0.489 + 0.006 = $-2 Mil.
Cash Flow from Operations was 124.9 + 138.868 + 125.864 + 159.922 = $550 Mil.
Accounts Receivable was $374 Mil.
Revenue was 486.115 + 504.119 + 477.939 + 475.059 = $1,943 Mil.
Gross Profit was 280.517 + 292.924 + 273.539 + 272.083 = $1,119 Mil.
Total Current Assets was $1,035 Mil.
Total Assets was $5,531 Mil.
Property, Plant and Equipment(Net PPE) was $187 Mil.
Depreciation, Depletion and Amortization(DDA) was $270 Mil.
Selling, General & Admin. Expense(SGA) was $576 Mil.
Total Current Liabilities was $603 Mil.
Long-Term Debt was $2,120 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)
=(384.639 / 1950.446) / (374.333 / 1943.232)
=0.19720566 / 0.19263423
=1.0237

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)
=(1119.063 / 1943.232) / (1114.134 / 1950.446)
=0.5758772 / 0.57122012
=1.0082

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 - (1573.57 + 178.22) / 6195.13) / (1 - (1034.559 + 186.719) / 5530.628)
=0.71723112 / 0.77917915
=0.9205

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
=1950.446 / 1943.232
=1.0037

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))
=(269.66 / (269.66 + 186.719)) / (231.205 / (231.205 + 178.22))
=0.59086855 / 0.5647066
=1.0463

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)
=(559.554 / 1950.446) / (575.859 / 1943.232)
=0.28688515 / 0.29634084
=0.9681

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)
=((1961.23 + 1698.32) / 6195.13) / ((2119.825 + 602.978) / 5530.628)
=0.590714 / 0.49231353
=1.1999

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
=(-24.322 - -2.299 - 549.554) / 6195.13
=-0.0923

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 -2.97 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 local exchange's currency.

Nuance Communications Inc Annual Data

Sep07Sep08Sep09Sep10Sep11Sep12Sep13Sep14Sep15Sep16
DSRI 1.03690.72060.87490.88541.09521.08440.89331.07930.86791.0091
GMI 1.02581.05431.02390.98031.02120.97991.07991.04420.98430.994
AQI 1.0351.01770.94351.00391.01560.88921.07261.04161.02640.9957
SGI 1.54951.44261.09431.17741.17861.25231.12341.03671.0041.0092
DEPI 0.97580.83740.95190.99731.04481.11171.09321.05170.96960.9964
SGAI 0.91490.89710.86261.03620.99220.93651.00250.99050.96740.9266
LVGI 1.16980.84210.80830.9030.99111.4361.04990.97321.04071.1143
TATA -0.0554-0.0792-0.0815-0.0852-0.0806-0.0497-0.0841-0.0868-0.1058-0.1006
M-score -2.23-2.63-2.82-2.81-2.58-2.58-2.80-2.72-3.10-2.96

Nuance Communications Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.07931.01380.99560.90060.86790.8920.91930.98511.00911.0237
GMI 1.04421.02391.0090.97930.98470.97520.98240.9970.99371.0082
AQI 1.04161.02481.04081.08271.02641.01541.05420.97780.99570.9205
SGI 1.03671.03461.02081.0191.0041.00821.01041.00911.00921.0037
DEPI 1.05171.11061.02081.00780.90850.91241.06521.04911.06341.0463
SGAI 0.99050.98760.98080.98910.96490.92990.92770.92390.9290.9681
LVGI 0.97320.95950.98580.98371.04071.04161.1421.16951.11431.1999
TATA -0.0868-0.0899-0.1186-0.118-0.1315-0.1312-0.1174-0.1119-0.1006-0.0923
M-score -2.72-2.81-2.99-3.08-3.23-3.20-3.11-3.06-2.96-2.97
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