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GuruFocus has detected 2 Warning Signs with Verisk Analytics Inc $VRSK.
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Verisk Analytics Inc (NAS:VRSK)
Beneish M-Score
-2.38 (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.

Verisk Analytics Inc has a M-score of -2.38 suggests that the company is not a manipulator.

VRSK' s Beneish M-Score Range Over the Past 10 Years
Min: -2.93   Max: -2.01
Current: -2.38

-2.93
-2.01

During the past 10 years, the highest Beneish M-Score of Verisk Analytics Inc was -2.01. The lowest was -2.93. And the median was -2.51.


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 Verisk Analytics 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 * 0.9365+0.528 * 1.0196+0.404 * 0.9788+0.892 * 1.0728+0.115 * 1.1626
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9536+4.679 * 0.0083-0.327 * 0.9204
=-2.38

* 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 $299 Mil.
Revenue was 502.6 + 506.123 + 498.081 + 498.296 = $2,005 Mil.
Gross Profit was 319.7 + 313.131 + 328.416 + 319.83 = $1,281 Mil.
Total Current Assets was $514 Mil.
Total Assets was $4,749 Mil.
Property, Plant and Equipment(Net PPE) was $378 Mil.
Depreciation, Depletion and Amortization(DDA) was $212 Mil.
Selling, General & Admin. Expense(SGA) was $306 Mil.
Total Current Liabilities was $672 Mil.
Long-Term Debt was $2,281 Mil.
Net Income was 108.8 + 109.248 + 127.577 + 261.736 = $607 Mil.
Non Operating Income was 1.9 + 3.086 + 2.124 + 0.846 = $8 Mil.
Cash Flow from Operations was 317.9 + 82.429 + 85.186 + 74.585 = $560 Mil.
Accounts Receivable was $297 Mil.
Revenue was 492.7 + 477.4 + 470.408 + 428.599 = $1,869 Mil.
Gross Profit was 319.4 + 316.698 + 307.534 + 273.96 = $1,218 Mil.
Total Current Assets was $587 Mil.
Total Assets was $5,459 Mil.
Property, Plant and Equipment(Net PPE) was $342 Mil.
Depreciation, Depletion and Amortization(DDA) was $246 Mil.
Selling, General & Admin. Expense(SGA) was $300 Mil.
Total Current Liabilities was $1,417 Mil.
Long-Term Debt was $2,272 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)
=(298.7 / 2005.1) / (297.312 / 1869.107)
=0.14897013 / 0.15906633
=0.9365

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)
=(1217.592 / 1869.107) / (1281.077 / 2005.1)
=0.6514298 / 0.63890928
=1.0196

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 - (513.8 + 377.8) / 4748.7) / (1 - (586.783 + 341.989) / 5459.147)
=0.81224335 / 0.82986866
=0.9788

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
=2005.1 / 1869.107
=1.0728

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))
=(245.517 / (245.517 + 341.989)) / (212 / (212 + 377.8))
=0.41789701 / 0.35944388
=1.1626

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)
=(306.463 / 2005.1) / (299.586 / 1869.107)
=0.15284175 / 0.16028296
=0.9536

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)
=((2281 + 672.4) / 4748.7) / ((2271.879 + 1416.879) / 5459.147)
=0.62193864 / 0.67570227
=0.9204

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
=(607.361 - 7.956 - 560.1) / 4748.7
=0.0083

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.

Verisk Analytics Inc has a M-score of -2.38 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.

Verisk Analytics Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.27681.08631.04930.7841.38790.88960.8841
GMI 0.87990.94120.99511.03790.95380.98011.0163
AQI 1.06010.86561.22460.93240.9861.17270.9764
SGI 1.10831.04661.18171.13340.89681.23031.1332
DEPI 1.05271.06230.98411.1031.13620.84541.0255
SGAI 0.92321.14570.93350.9180.9121.20770.9562
LVGI 1.1111.020.83370.86671.17420.83990.9346
TATA -0.0769-0.0608-0.0589-0.0635-0.0382-0.0390.0084
M-score -2.54-2.75-2.40-2.79-2.45-2.50-2.40

Verisk Analytics Inc Quarterly Data

Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16Mar17
DSRI 1.38791.51381.76971.67130.88960.98660.65680.62970.88410.9365
GMI 0.95380.91390.8890.8580.98011.01081.03171.05631.01631.0196
AQI 0.9861.05791.30391.29931.17271.21180.99571.00560.97640.9788
SGI 0.89680.86310.84890.84341.23031.32961.37431.37271.13321.0728
DEPI 1.13621.08221.1021.04020.84540.78020.72810.79491.02551.1626
SGAI 0.9120.90691.05681.14191.20771.25261.03860.9950.95620.9536
LVGI 1.17421.11241.06321.07620.83990.89760.88170.88720.93460.9204
TATA -0.0382-0.0599-0.0319-0.0431-0.039-0.0472-0.01380.00550.00840.0083
M-score -2.45-2.44-2.01-2.20-2.50-2.36-2.51-2.42-2.40-2.38
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