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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 * 0.7729||+||0.528 * 1.08||+||0.404 * 0.8863||+||0.892 * 0.9421||+||0.115 * 0.8705|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9939||+||4.679 * -0.0935||-||0.327 * 1.284|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $32 Mil.|
Revenue was 600.475 + 471.831 + 572.198 + 571.308 = $2,216 Mil.
Gross Profit was 472.27 + 333.962 + 450.761 + 418.553 = $1,676 Mil.
Total Current Assets was $1,011 Mil.
Total Assets was $1,781 Mil.
Property, Plant and Equipment(Net PPE) was $453 Mil.
Depreciation, Depletion and Amortization(DDA) was $72 Mil.
Selling, General & Admin. Expense(SGA) was $1,483 Mil.
Total Current Liabilities was $491 Mil.
Long-Term Debt was $362 Mil.
Net Income was 44.713 + 3.316 + 35.84 + 16.267 = $100 Mil.
Non Operating Income was -11.06 + -2.863 + -3.289 + -14.428 = $-32 Mil.
Cash Flow from Operations was 138.541 + -2.716 + 80.145 + 82.362 = $298 Mil.
|Accounts Receivable was $44 Mil.
Revenue was 560.209 + 543.332 + 609.607 + 638.8 = $2,352 Mil.
Gross Profit was 449.946 + 438.277 + 503.102 + 529.525 = $1,921 Mil.
Total Current Assets was $808 Mil.
Total Assets was $1,603 Mil.
Property, Plant and Equipment(Net PPE) was $473 Mil.
Depreciation, Depletion and Amortization(DDA) was $64 Mil.
Selling, General & Admin. Expense(SGA) was $1,584 Mil.
Total Current Liabilities was $421 Mil.
Long-Term Debt was $177 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)|
|=||(31.706 / 2215.812)||/||(43.543 / 2351.948)|
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)|
|=||(1920.85 / 2351.948)||/||(1675.546 / 2215.812)|
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 - (1010.7 + 453.342) / 1780.869)||/||(1 - (807.707 + 473.216) / 1602.62)|
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))|
|=||(64.06 / (64.06 + 473.216))||/||(71.948 / (71.948 + 453.342))|
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)|
|=||(1483.344 / 2215.812)||/||(1584.149 / 2351.948)|
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)|
|=||((362.051 + 491.105) / 1780.869)||/||((177.178 + 420.749) / 1602.62)|
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|
|=||(100.136 - -31.64||-||298.332)||/||1780.869|
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 -3.29 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