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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 Novogen Ltd was 1.61. The lowest was -10000000.00. And the median was -3.03.
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 * 0.0283||+||0.528 * 1||+||0.404 * 0.0707||+||0.892 * 0.843||+||0.115 * 1.1204|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.1||+||4.679 * -0.083||-||0.327 * 0.0553|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|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.
Net Income was $-5.51 Mil.
Non Operating Income was $1.89 Mil.
Cash Flow from Operations was $-4.44 Mil.
|Accounts Receivable was $0.06 Mil.
Revenue was $0.08 Mil.
Gross Profit was $0.08 Mil.
Total Current Assets was $2.47 Mil.
Total Assets was $4.36 Mil.
Property, Plant and Equipment(Net PPE) was $0.01 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.54 Mil.
Selling, General & Admin. Expense(SGA) was $3.20 Mil.
Total Current Liabilities was $3.04 Mil.
Long-Term Debt was $0.00 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)|
|=||(0.00154320987654 / 0.0686728395062)||/||(0.064606741573 / 0.0814606741573)|
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)|
|=||(0.0814606741573 / 0.0814606741573)||/||(0.0686728395062 / 0.0686728395062)|
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 - (34.4513888889 + 0.0655864197531) / 35.6018518519)||/||(1 - (2.47003745318 + 0.0131086142322) / 4.36329588015)|
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))|
|=||(0.535580524345 / (0.535580524345 + 0.0131086142322))||/||(0.443672839506 / (0.443672839506 + 0.0655864197531))|
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)|
|=||(2.96527777778 / 0.0686728395062)||/||(3.19756554307 / 0.0814606741573)|
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 + 1.37191358025) / 35.6018518519)||/||((0 + 3.04026217228) / 4.36329588015)|
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|
|=||(-5.50848765432 - 1.89197530864||-||-4.44444444444)||/||35.6018518519|
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 -3.97 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
Novogen Ltd Annual Data