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GuruFocus has detected 5 Warning Signs with Nasdaq Inc $NDAQ.
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Nasdaq Inc (NAS:NDAQ)
Beneish M-Score
-2.18 (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.

Nasdaq Inc has a M-score of -2.18 signals that the company is a manipulator.

NDAQ' s Beneish M-Score Range Over the Past 10 Years
Min: -3.96   Max: -0.74
Current: -2.18

-3.96
-0.74

During the past 13 years, the highest Beneish M-Score of Nasdaq Inc was -0.74. The lowest was -3.96. And the median was -2.60.


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 Nasdaq 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 * 1.2826+0.528 * 0.9951+0.404 * 1.001+0.892 * 1.0934+0.115 * 0.948
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0472+4.679 * 0.0009-0.327 * 1.1001
=-2.18

* 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 $467 Mil.
Revenue was 971 + 973 + 929 + 897 = $3,770 Mil.
Gross Profit was 583 + 599 + 585 + 559 = $2,326 Mil.
Total Current Assets was $4,947 Mil.
Total Assets was $14,490 Mil.
Property, Plant and Equipment(Net PPE) was $376 Mil.
Depreciation, Depletion and Amortization(DDA) was $177 Mil.
Selling, General & Admin. Expense(SGA) was $1,200 Mil.
Total Current Liabilities was $4,886 Mil.
Long-Term Debt was $3,242 Mil.
Net Income was 169 + -225 + 131 + 70 = $145 Mil.
Non Operating Income was 4 + -588 + 2 + 3 = $-579 Mil.
Cash Flow from Operations was 244 + 269 + 61 + 137 = $711 Mil.
Accounts Receivable was $333 Mil.
Revenue was 905 + 865 + 871 + 807 = $3,448 Mil.
Gross Profit was 534 + 536 + 529 + 518 = $2,117 Mil.
Total Current Assets was $4,722 Mil.
Total Assets was $13,717 Mil.
Property, Plant and Equipment(Net PPE) was $326 Mil.
Depreciation, Depletion and Amortization(DDA) was $142 Mil.
Selling, General & Admin. Expense(SGA) was $1,048 Mil.
Total Current Liabilities was $4,429 Mil.
Long-Term Debt was $2,565 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)
=(467 / 3770) / (333 / 3448)
=0.12387268 / 0.09657773
=1.2826

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)
=(2117 / 3448) / (2326 / 3770)
=0.61397912 / 0.61697613
=0.9951

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 - (4947 + 376) / 14490) / (1 - (4722 + 326) / 13717)
=0.6326432 / 0.6319895
=1.001

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
=3770 / 3448
=1.0934

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))
=(142 / (142 + 326)) / (177 / (177 + 376))
=0.3034188 / 0.32007233
=0.948

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)
=(1200 / 3770) / (1048 / 3448)
=0.31830239 / 0.30394432
=1.0472

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)
=((3242 + 4886) / 14490) / ((2565 + 4429) / 13717)
=0.56093858 / 0.50987825
=1.1001

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
=(145 - -579 - 711) / 14490
=0.0009

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.

Nasdaq Inc has a M-score of -2.18 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.

Nasdaq Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.72770.90670.95041.05830.9591.19171.14640.90810.83621.2465
GMI 1.2440.83360.93810.89670.96680.91650.90940.99930.96070.9996
AQI 1.14881.35331.19720.69331.11721.56670.89390.95451.00540.9344
SGI 1.471.49840.93430.93551.07770.90721.02951.090.97141.0891
DEPI 1.38471.11610.86831.00591.06881.09321.05540.97961.06680.9368
SGAI 0.68931.10171.15941.14231.01131.08021.22940.95230.98891.0275
LVGI 0.33823.25380.76121.45910.89590.54381.36911.02031.01911.2191
TATA -0.03970.0127-0.018-0.0021-0.0189-0.0197-0.0162-0.0135-0.0225-0.0024
M-score -1.99-2.75-2.59-2.85-2.47-2.15-2.64-2.57-2.78-2.30

Nasdaq Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 0.90810.77090.82110.74570.83620.97171.18821.20651.24651.2826
GMI 0.99931.00861.01451.00610.96070.96240.98280.97380.99960.9951
AQI 0.95450.9540.99391.01231.00540.93520.97490.96850.93441.001
SGI 1.091.02820.99591.00760.97140.99621.03971.04051.08911.0934
DEPI 0.97961.00661.04131.05581.06681.07491.00880.95860.93680.948
SGAI 0.95230.9920.94270.92880.98890.98130.98991.04611.02751.0472
LVGI 1.02031.07581.00841.02541.01911.08631.18751.16851.21911.1001
TATA -0.0135-0.0261-0.0217-0.0248-0.0225-0.0114-0.0122-0.0126-0.00240.0009
M-score -2.57-2.82-2.73-2.80-2.78-2.63-2.41-2.41-2.30-2.18
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