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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 -1.30. 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 * 1.0281||+||0.528 * 1.059||+||0.404 * 1.0648||+||0.892 * 0.891||+||0.115 * 0.8154|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0021||+||4.679 * -0.0806||-||0.327 * 1.1129|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $32 Mil.|
Revenue was 471.831 + 572.198 + 571.308 + 560.209 = $2,176 Mil.
Gross Profit was 333.962 + 450.761 + 418.553 + 449.946 = $1,653 Mil.
Total Current Assets was $742 Mil.
Total Assets was $1,511 Mil.
Property, Plant and Equipment(Net PPE) was $454 Mil.
Depreciation, Depletion and Amortization(DDA) was $72 Mil.
Selling, General & Admin. Expense(SGA) was $1,469 Mil.
Total Current Liabilities was $448 Mil.
Long-Term Debt was $168 Mil.
Net Income was 3.316 + 35.84 + 16.267 + 44.657 = $100 Mil.
Non Operating Income was -2.863 + -3.289 + -14.428 + -2.758 = $-23 Mil.
Cash Flow from Operations was -2.716 + 80.145 + 82.362 + 85.404 = $245 Mil.
|Accounts Receivable was $35 Mil.
Revenue was 543.332 + 609.607 + 638.8 + 650.027 = $2,442 Mil.
Gross Profit was 438.277 + 503.102 + 529.525 + 494.017 = $1,965 Mil.
Total Current Assets was $823 Mil.
Total Assets was $1,613 Mil.
Property, Plant and Equipment(Net PPE) was $473 Mil.
Depreciation, Depletion and Amortization(DDA) was $59 Mil.
Selling, General & Admin. Expense(SGA) was $1,645 Mil.
Total Current Liabilities was $410 Mil.
Long-Term Debt was $181 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)|
|=||(31.985 / 2175.546)||/||(34.919 / 2441.766)|
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)|
|=||(450.761 / 2441.766)||/||(333.962 / 2175.546)|
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 - (742.158 + 453.648) / 1511.473)||/||(1 - (823.149 + 473.177) / 1612.617)|
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))|
|=||(59.268 / (59.268 + 473.177))||/||(71.715 / (71.715 + 453.648))|
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)|
|=||(1469.017 / 2175.546)||/||(1645.284 / 2441.766)|
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)|
|=||((168.377 + 448.063) / 1511.473)||/||((181.197 + 409.762) / 1612.617)|
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|
|=||(100.08 - -23.338||-||245.195)||/||1511.473|
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 -2.93 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
Nu Skin Enterprises Inc Annual Data
Nu Skin Enterprises Inc Quarterly Data