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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 Nu Skin Enterprises Inc was -1.33. The lowest was -3.39. And the median was -2.61.
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 Nu Skin Enterprises 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 * 0.7124||+||0.528 * 1.0179||+||0.404 * 1.0901||+||0.892 * 1.1287||+||0.115 * 0.8232|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0095||+||4.679 * 0.257||-||0.327 * 0.7067|
|This Year (Sep14) TTM:||Last Year (Sep13) TTM:|
|Accounts Receivable was $41 Mil.|
Revenue was 638.8 + 650.027 + 671.061 + 1055.786 = $3,016 Mil.
Gross Profit was 529.525 + 494.017 + 564.417 + 891.114 = $2,479 Mil.
Total Current Assets was $805 Mil.
Total Assets was $1,573 Mil.
Property, Plant and Equipment(Net PPE) was $440 Mil.
Depreciation, Depletion and Amortization(DDA) was $50 Mil.
Selling, General & Admin. Expense(SGA) was $2,030 Mil.
Total Current Liabilities was $450 Mil.
Long-Term Debt was $96 Mil.
Net Income was 68.308 + 19.507 + 54.854 + 125.271 = $268 Mil.
Non Operating Income was 1.073 + -21.119 + -17.508 + 6.399 = $-31 Mil.
Cash Flow from Operations was 33.608 + -24.265 + -160.6 + 46.033 = $-105 Mil.
|Accounts Receivable was $51 Mil.
Revenue was 908.299 + 671.328 + 541.305 + 550.838 = $2,672 Mil.
Gross Profit was 768.483 + 560.055 + 451.26 + 455.794 = $2,236 Mil.
Total Current Assets was $1,013 Mil.
Total Assets was $1,688 Mil.
Property, Plant and Equipment(Net PPE) was $353 Mil.
Depreciation, Depletion and Amortization(DDA) was $32 Mil.
Selling, General & Admin. Expense(SGA) was $1,781 Mil.
Total Current Liabilities was $709 Mil.
Long-Term Debt was $121 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)|
|=||(40.612 / 3015.674)||/||(50.506 / 2671.77)|
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)|
|=||(494.017 / 2671.77)||/||(529.525 / 3015.674)|
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 - (805.422 + 440.352) / 1573.249)||/||(1 - (1013.357 + 352.709) / 1688.487)|
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))|
|=||(32.21 / (32.21 + 352.709))||/||(49.83 / (49.83 + 440.352))|
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)|
|=||(2029.588 / 3015.674)||/||(1781.173 / 2671.77)|
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)|
|=||((95.783 + 450.174) / 1573.249)||/||((120.606 + 708.51) / 1688.487)|
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|
|=||(267.94 - -31.155||-||-105.224)||/||1573.249|
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.
Nu Skin Enterprises Inc has a M-score of -1.31 signals that the company is likely to 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
Nu Skin Enterprises Inc Annual Data
Nu Skin Enterprises Inc Quarterly Data