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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 -1.90. The lowest was -3.24. 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 * 0.6453||+||0.528 * 1.0331||+||0.404 * 1.1585||+||0.892 * 0.8089||+||0.115 * 0.7668|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0156||+||4.679 * 0.1854||-||0.327 * 0.7382|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $36 Mil.|
Revenue was 609.607 + 638.8 + 650.027 + 671.061 = $2,569 Mil.
Gross Profit was 503.102 + 529.525 + 494.017 + 564.417 = $2,091 Mil.
Total Current Assets was $835 Mil.
Total Assets was $1,614 Mil.
Property, Plant and Equipment(Net PPE) was $465 Mil.
Depreciation, Depletion and Amortization(DDA) was $55 Mil.
Selling, General & Admin. Expense(SGA) was $1,739 Mil.
Total Current Liabilities was $418 Mil.
Long-Term Debt was $165 Mil.
Net Income was 46.507 + 68.308 + 19.507 + 54.854 = $189 Mil.
Non Operating Income was -16.127 + 1.073 + -21.119 + -17.508 = $-54 Mil.
Cash Flow from Operations was 94.793 + 33.608 + -24.265 + -160.6 = $-56 Mil.
|Accounts Receivable was $69 Mil.
Revenue was 1055.786 + 908.299 + 671.328 + 541.305 = $3,177 Mil.
Gross Profit was 891.114 + 768.483 + 560.055 + 451.26 = $2,671 Mil.
Total Current Assets was $1,118 Mil.
Total Assets was $1,821 Mil.
Property, Plant and Equipment(Net PPE) was $396 Mil.
Depreciation, Depletion and Amortization(DDA) was $35 Mil.
Selling, General & Admin. Expense(SGA) was $2,117 Mil.
Total Current Liabilities was $777 Mil.
Long-Term Debt was $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)|
|=||(35.834 / 2569.495)||/||(68.652 / 3176.718)|
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)|
|=||(529.525 / 3176.718)||/||(503.102 / 2569.495)|
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 - (834.667 + 464.783) / 1614.434)||/||(1 - (1118.334 + 396.042) / 1821.062)|
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))|
|=||(34.923 / (34.923 + 396.042))||/||(54.924 / (54.924 + 464.783))|
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)|
|=||(1738.873 / 2569.495)||/||(2116.8 / 3176.718)|
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)|
|=||((164.567 + 418.329) / 1614.434)||/||((113.852 + 776.792) / 1821.062)|
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|
|=||(189.176 - -53.681||-||-56.464)||/||1614.434|
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 -1.97 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