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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 Nexstar Broadcasting Group Inc was -1.33. The lowest was -3.63. And the median was -2.79.
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 Nexstar Broadcasting Group 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 * 0.9823||+||0.528 * 1.04||+||0.404 * 1.1518||+||0.892 * 1.2493||+||0.115 * 0.8372|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9572||+||4.679 * -0.0414||-||0.327 * 0.9905|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $214 Mil.|
Revenue was 275.659 + 261.994 + 255.658 + 252.262 = $1,046 Mil.
Gross Profit was 174.915 + 169.059 + 165.535 + 169.623 = $679 Mil.
Total Current Assets was $287 Mil.
Total Assets was $2,921 Mil.
Property, Plant and Equipment(Net PPE) was $284 Mil.
Depreciation, Depletion and Amortization(DDA) was $120 Mil.
Selling, General & Admin. Expense(SGA) was $260 Mil.
Total Current Liabilities was $181 Mil.
Long-Term Debt was $2,320 Mil.
Net Income was 24.799 + 24.529 + 21.727 + 27.174 = $98 Mil.
Non Operating Income was -0.126 + -0.147 + -0.136 + -0.134 = $-1 Mil.
Cash Flow from Operations was 66.785 + 57.778 + 38.431 + 56.611 = $220 Mil.
|Accounts Receivable was $175 Mil.
Revenue was 223.031 + 219.349 + 201.735 + 192.804 = $837 Mil.
Gross Profit was 144.48 + 146.311 + 133.706 + 140.873 = $565 Mil.
Total Current Assets was $289 Mil.
Total Assets was $1,860 Mil.
Property, Plant and Equipment(Net PPE) was $272 Mil.
Depreciation, Depletion and Amortization(DDA) was $90 Mil.
Selling, General & Admin. Expense(SGA) was $217 Mil.
Total Current Liabilities was $143 Mil.
Long-Term Debt was $1,465 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)|
|=||(214.404 / 1045.573)||/||(174.709 / 836.919)|
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)|
|=||(565.37 / 836.919)||/||(679.132 / 1045.573)|
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 - (287.021 + 283.6) / 2920.696)||/||(1 - (289.153 + 271.567) / 1860.206)|
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))|
|=||(90.028 / (90.028 + 271.567))||/||(120.03 / (120.03 + 283.6))|
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)|
|=||(259.747 / 1045.573)||/||(217.213 / 836.919)|
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)|
|=||((2320.077 + 181.15) / 2920.696)||/||((1465.251 + 143.018) / 1860.206)|
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|
|=||(98.229 - -0.543||-||219.605)||/||2920.696|
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.
Nexstar Broadcasting Group Inc has a M-score of -2.39 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
Nexstar Broadcasting Group Inc Annual Data
Nexstar Broadcasting Group Inc Quarterly Data