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GuruFocus has detected 6 Warning Signs with Novogen Ltd $NVGN.
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Novogen Ltd (NAS:NVGN)
Beneish M-Score
0.73 (As of Today)

Warning Sign:

Beneish M-Score 0.73 higher than -2.22, which implies that it might have manipulated its financial results.

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.

Novogen Ltd has a M-score of signals that the company is a manipulator.

NVGN' s Beneish M-Score Range Over the Past 10 Years
Min: -10000000   Max: 1.61
Current: 0.73

-10000000
1.61

During the past 13 years, the highest Beneish M-Score of Novogen Ltd was 1.61. The lowest was -10000000.00. And the median was -2.94.


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 Novogen Ltd 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 * +0.528 * +0.404 * +0.892 * +0.115 *
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * +4.679 * -0.327 *
=

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $0.01 Mil.
Revenue was $0.30 Mil.
Gross Profit was $0.00 Mil.
Total Current Assets was $25.23 Mil.
Total Assets was $26.29 Mil.
Property, Plant and Equipment(Net PPE) was $0.44 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.48 Mil.
Selling, General & Admin. Expense(SGA) was $4.26 Mil.
Total Current Liabilities was $1.06 Mil.
Long-Term Debt was $0.00 Mil.
Net Income was $-8.93 Mil.
Non Operating Income was $0.17 Mil.
Cash Flow from Operations was $-8.87 Mil.
Accounts Receivable was $0.00 Mil.
Revenue was $0.07 Mil.
Gross Profit was $0.07 Mil.
Total Current Assets was $34.45 Mil.
Total Assets was $35.60 Mil.
Property, Plant and Equipment(Net PPE) was $0.07 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.44 Mil.
Selling, General & Admin. Expense(SGA) was $2.97 Mil.
Total Current Liabilities was $1.37 Mil.
Long-Term Debt was $0.00 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)
=(0.00666173205033 / 0.300518134715) / (0.00154320987654 / 0.0686728395062)
=0.02216749 / 0.02247191
=

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)
=(0.0686728395062 / 0.0686728395062) / (0 / 0.300518134715)
=1 / 0
=

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 - (25.2331606218 + 0.438193930422) / 26.289415248) / (1 - (34.4513888889 + 0.0655864197531) / 35.6018518519)
=0.02350987 / 0.03047248
=

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
=0.300518134715 / 0.0686728395062
=

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))
=(0.443672839506 / (0.443672839506 + 0.0655864197531)) / (0.475943745374 / (0.475943745374 + 0.438193930422))
=0.87121212 / 0.52064777
=

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)
=(4.26424870466 / 0.300518134715) / (2.96527777778 / 0.0686728395062)
=14.18965517 / 43.17977528
=

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)
=((0 + 1.05995558845) / 26.289415248) / ((0 + 1.37191358025) / 35.6018518519)
=0.04031872 / 0.03853489
=

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
=(-8.92820133235 - 0.168763878608 - -8.86750555144) / 26.289415248
=-0.0087

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.

Novogen Ltd has a M-score of signals that the company is likely to 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.

Novogen Ltd Annual Data

Jun07Jun08Jun09Jun10Jun11Jun12Jun13Jun14Jun15Jun16
DSRI 0.86321.1390.87835.17482.15630.0283
GMI 1.14940.86470.89450.773711
AQI -01-0.500.95650.0707
SGI 1.12970.86590.70830.1710.07760.843
DEPI 0.43971.41370.85650.82990.98911.1204
SGAI 1.16630.99640.99764.599724.95671.1
LVGI 1.03991.35181.37281.32412.34530.0553
TATA -0.157-0.02880.04420.2209-0.2616-0.0497
M-score -3.66-2.74-3.450.39-8.04-3.82
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