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GuruFocus has detected 2 Warning Signs with NACCO Industries Inc $NC.
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NACCO Industries Inc (NYSE:NC)
Beneish M-Score
-2.65 (As of Today)

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.

NACCO Industries Inc has a M-score of -2.65 suggests that the company is not a manipulator.

NC' s Beneish M-Score Range Over the Past 10 Years
Min: -4.88   Max: -0.81
Current: -2.65

-4.88
-0.81

During the past 13 years, the highest Beneish M-Score of NACCO Industries Inc was -0.81. The lowest was -4.88. And the median was -2.57.


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 NACCO Industries 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 * 1.1352+0.528 * 0.8411+0.404 * 0.9706+0.892 * 0.9509+0.115 * 1.1099
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0715+4.679 * -0.037-0.327 * 0.9589
=-2.65

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

This Year (Mar17) TTM:Last Year (Mar16) TTM:
Accounts Receivable was $79.7 Mil.
Revenue was 168.582 + 284.218 + 220.792 + 178.007 = $851.6 Mil.
Gross Profit was 39.135 + 73.611 + 51.708 + 40.529 = $205.0 Mil.
Total Current Assets was $330.9 Mil.
Total Assets was $620.3 Mil.
Property, Plant and Equipment(Net PPE) was $132.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $19.6 Mil.
Selling, General & Admin. Expense(SGA) was $197.4 Mil.
Total Current Liabilities was $167.2 Mil.
Long-Term Debt was $125.3 Mil.
Net Income was 4.978 + 24.131 + -0.442 + 3.116 = $31.8 Mil.
Non Operating Income was 0.627 + 0.999 + -0.363 + -2.063 = $-0.8 Mil.
Cash Flow from Operations was -42.204 + 47.777 + 29.189 + 20.788 = $55.6 Mil.
Accounts Receivable was $73.9 Mil.
Revenue was 173.421 + 286.519 + 239.107 + 196.5 = $895.5 Mil.
Gross Profit was 40.005 + 63.711 + 42.215 + 35.381 = $181.3 Mil.
Total Current Assets was $315.8 Mil.
Total Assets was $606.5 Mil.
Property, Plant and Equipment(Net PPE) was $132.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $22.1 Mil.
Selling, General & Admin. Expense(SGA) was $193.8 Mil.
Total Current Liabilities was $140.8 Mil.
Long-Term Debt was $157.5 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)
=(79.718 / 851.599) / (73.851 / 895.547)
=0.09360979 / 0.08246468
=1.1352

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)
=(181.312 / 895.547) / (204.983 / 851.599)
=0.2024595 / 0.24070366
=0.8411

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 - (330.895 + 132.158) / 620.291) / (1 - (315.766 + 132.345) / 606.514)
=0.2534907 / 0.26116957
=0.9706

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
=851.599 / 895.547
=0.9509

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))
=(22.114 / (22.114 + 132.345)) / (19.572 / (19.572 + 132.158))
=0.14317068 / 0.12899229
=1.1099

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)
=(197.434 / 851.599) / (193.768 / 895.547)
=0.23183916 / 0.21636832
=1.0715

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)
=((125.313 + 167.204) / 620.291) / ((157.468 + 140.797) / 606.514)
=0.47158027 / 0.49176936
=0.9589

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
=(31.783 - -0.8 - 55.55) / 620.291
=-0.037

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.

NACCO Industries Inc has a M-score of -2.65 suggests that the company will not 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.

NACCO Industries Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.18660.80191.19513.52760.25441.13390.93361.06310.88051.1314
GMI 1.00921.24150.75870.63481.04911.02521.09031.14971.0530.8154
AQI 0.87130.45891.11720.80131.71760.76241.16491.32991.15920.9435
SGI 1.07581.01730.63040.38330.89261.10491.06790.96151.02130.9351
DEPI 1.03510.99570.96072.23330.50961.47440.88830.67390.98651.1821
SGAI 1.01610.9491.29591.31561.08740.98850.89931.03670.95571.0913
LVGI 1.0361.19390.90331.06730.86910.87491.03231.20070.92730.954
TATA 0.0017-0.263-0.08380.0224-0.0277-0.0397-0.0096-0.0717-0.1311-0.094
M-score -2.29-4.02-3.13-0.81-3.10-2.43-2.42-2.69-3.06-2.96

NACCO Industries Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.06311.23151.04921.18980.88050.81840.90610.89191.13141.1352
GMI 1.14971.12771.06541.1051.0531.0120.9620.8590.81540.8411
AQI 1.32991.45521.48881.30081.15921.06941.06051.17620.94350.9706
SGI 0.96150.9990.991.01661.02130.98080.96460.92670.93510.9509
DEPI 0.67390.61510.64190.67650.98651.05491.09761.04441.18211.1099
SGAI 1.03670.99710.96430.93050.95571.00451.06471.10121.09131.0715
LVGI 1.20071.12891.13911.14730.92730.9180.90830.91880.9540.9589
TATA -0.0717-0.1782-0.1864-0.1589-0.1311-0.07-0.0743-0.1034-0.094-0.037
M-score -2.69-2.94-3.16-2.93-3.06-2.93-2.91-3.12-2.96-2.65
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