Novan Beneish M Score

NOVN
 Stock
  

USD 3.01  0.02  0.66%   

This module uses fundamental data of Novan to approximate the value of its Beneish M Score. Novan M Score tells investors if the company management is likely to be manipulating earnings. The score is calculated using eight financial indicators that are adjusted by a specific multiplier. Please note, the M Score is a probabilistic model and cannot detect companies that manipulate their earnings with 100% accuracy. Additionally, see Novan Piotroski F Score and Novan Altman Z Score analysis.
  
Novan Total Debt is quite stable at the moment as compared to the past year. The company's current value of Total Debt is estimated at 1.13 Million. Debt Current is expected to rise to about 593.1 K this year, although the value of Issuance Repayment of Debt Securities will most likely fall to about 751.8 K. Novan Total Assets Per Share are quite stable at the moment as compared to the past year. The company's current value of Total Assets Per Share is estimated at 3.76. Asset Turnover is expected to rise to 0.05 this year, although the value of PPandE Turnover will most likely fall to 0.39.
At this time, it appears that Novan Inc is an unlikely manipulator. The earnings manipulation may begin if Novan's top management creates an artificial sense of financial success, forcing the stock price to be traded at a high price-earnings multiple than it should be. In general, excessive earnings management by Novan executives may lead to removing some of the operating profits from subsequent periods to inflate earnings in the following periods. This way, the manipulation of Novan's earnings can lead to misrepresentations of actual financial condition, taking the otherwise loyal stakeholders on to the path of questionable ethical practices and plain fraud.
-3.42
Beneish M Score - Unlikely Manipulator
Elasticity of Receivables0.78Focus
Asset QualityN/AFocus
Expense Coverage0.97Focus
Gross Margin Strengs0.99Focus
Accruals Factor0.97Focus
Depreciation Resistance1.0Focus
Net Sales Growth1.02Focus
Financial Leverage Condition1.0Focus

Novan Beneish M-Score Indicator Trends

The cure to earnings manipulation is the transparency of financial reporting. It will typically remove the temptation of the top executives to inflate earnings (i.e., to promote the idea of 'winning at any cost'). Because a healthy internal audit department can enhance transparency, the board should promote the auditors' access to all the record-keeping systems across the enterprise. For example, if Novan's auditors report directly to the board (not management), the managers will be reluctant to manipulate simply due to the fear of punishment. On the other hand, the auditors will be free to investigate the ledgers properly because they know that the board has their back.
Current ValueLast YearChange From Last Year 10 Year Trend
RevenuesMM
Fairly Up
Increasing
Slightly volatile
Selling General and Administrative Expense12.9 M13 M
Slightly Down
Increasing
Slightly volatile
Depreciation Amortization and Accretion1.4 M1.3 M
Fairly Up
Increasing
Slightly volatile
Total Assets74.4 M69 M
Significantly Up
Increasing
Slightly volatile
Property Plant and Equipment Net2.8 M2.8 M
Fairly Up
Increasing
Stable
Trade and Non Trade Receivables4.5 M5.6 M
Significantly Down
Increasing
Slightly volatile
Total Liabilities54.6 M50.6 M
Significantly Up
Increasing
Slightly volatile
Current Assets58.4 M54.1 M
Significantly Up
Increasing
Slightly volatile
Assets Non Current3.3 M3.2 M
Fairly Up
Increasing
Slightly volatile
Current Liabilities9.6 M11.2 M
Fairly Down
Increasing
Slightly volatile
Liabilities Non Current43.6 M40.4 M
Significantly Up
Increasing
Slightly volatile
Total Debt1.1 M1.1 M
Fairly Up
Increasing
Slightly volatile
Debt Current593.1 K549.7 K
Significantly Up
Increasing
Slightly volatile
Debt Non Current564.2 K549.7 K
Fairly Up
Increasing
Stable
Gross Margin0.890.9
Fairly Down
Decreasing
Slightly volatile

Novan Inc Beneish M-Score Driver Matrix

One of the toughest challenges investors face today is learning how to quickly synthesize historical financial statements and information provided by the company, SEC reporting, and various external parties in order to detect the potential manipulation of earnings. Understanding the correlation between Novan's different financial indicators related to revenue, expenses, operating profit, and net earnings helps investors identify and prioritize their investing strategies towards Novan in a much-optimized way. Analyzing correlations between earnings drivers directly associated with dollar figures is the most effective way to find Novan's degree of accounting gimmicks and manipulations.

About Novan Beneish M Score

M-Score is one of many grading techniques for value stocks. It was developed by Professor M. Daniel Beneish of the Kelley School of Business at Indiana University and published in 1999 under the paper titled The Detection of Earnings Manipulation. The Beneish score is a multi-factor model that utilizes financial identifiers to compile eight variables used to classify whether a company has manipulated its reported earnings. The variables are built from the officially filed financial statements to create a final score call 'M Score.' The score helps to identify companies that are likely to manipulate their profits if they show deteriorating gross margins, operating expenses, and leverage against growing revenue.

Depreciation Amortization and Accretion

1.38 Million

Novan Depreciation Amortization and Accretion is quite stable at the moment as compared to the past year. The company's current value of Depreciation Amortization and Accretion is estimated at 1.38 Million

Novan Earnings Manipulation Drivers

Although earnings manipulation is typically not the result of intentional misconduct by the c-level executives, it is still a widespread practice by the senior management of public companies such as Novan. It is usually done by a series of misrepresentations of various accounting rules and operating activities across multiple financial cycles. The best way to spot the manipulation is to examine the historical financial statement to find inconsistencies in earning reports to find trends in assets or liabilities that are not sustainable in the future.
201720182019202020212022 (projected)
Total Assets21.13 M26.36 M29.1 M46.83 M68.96 M74.4 M
Current Assets3.7 M9.35 M15.72 M44.01 M54.13 M58.4 M
Assets Non Current17.43 M17.01 M13.37 M2.82 M3.25 M3.33 M
Property Plant and Equipment Net16.62 M15.87 M12.34 M2.41 M2.77 M2.84 M
Depreciation Amortization and Accretion1.42 M1.66 M2.03 M1.17 M1.35 M1.38 M
Selling General and Administrative Expense13.11 M11.51 M10.41 M11.27 M12.96 M12.95 M
Total Liabilities23.36 M21.16 M52.88 M43.85 M50.64 M54.64 M
Current Liabilities8.42 M9.06 M12.9 M8.7 M11.15 M9.58 M
Liabilities Non Current13.96 M10.86 M38.48 M35.15 M40.42 M43.62 M
Total Debt8.03 M8.02 M6.26 M956 K1.1 M1.13 M
Debt Non Current8.02 M8.01 M5.1 M478 K549.7 K564.17 K
Net Cash Flow from Operations(29.86 M)(28.62 M)(19.88 M)(31.06 M)(24.78 M)(26.73 M)

About Novan Fundamental Analysis

The Macroaxis Fundamental Analysis modules help investors analyze Novan Inc's financials across various querterly and yearly statements, indicators and fundamental ratios. We help investors to determine the real value of Novan using virtually all public information available. We use both quantitative as well as qualitative analysis to arrive at the intrinsic value of Novan Inc based on its fundamental data. In general, a quantitative approach, as applied to this company, focuses on analyzing financial statements comparatively, whereas a qaualitative method uses data that is important to a company's growth but cannot be measured and presented in a numerical way.
Please read more on our fundamental analysis page.
Novan, Inc., a pre-commercial nitric oxide-based pharmaceutical company, focuses on dermatology and anti-infective therapies. Its clinical stage dermatology drug candidates include SB204, a topical monotherapy for the treatment of acne vulgaris SB206, a topical anti-viral gel for the treatment of viral skin infections SB208, a topical broad-spectrum anti-fungal gel for the treatment of fungal infections of the skin and nails, including athletes foot and fungal nail infections and SB414, a topical cream-based gel product candidate for the treatment of inflammatory skin diseases. The company also develops SB207, an anti-viral product candidate for the treatment of external genital warts WH602, a nitric oxide-containing intravaginal gel to treat high-risk human papilloma virus WH504, a non-gel formulation product candidate to treat high-risk HPV and SB019 for the treatment of SARS-CoV-2. Novan, Inc. has a license agreement with Sato Pharmaceutical Co., Ltd. and a strategic alliance with Orion Corporation. Novan, Inc. was incorporated in 2006 and is headquartered in Durham, North Carolina.

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Additionally, see Novan Piotroski F Score and Novan Altman Z Score analysis. Note that the Novan Inc information on this page should be used as a complementary analysis to other Novan's statistical models used to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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Is Novan's industry expected to grow? Or is there an opportunity to expand the business' product line in the future? Factors like these will boost the valuation of Novan. If investors know Novan will grow in the future, the company's valuation will be higher. The financial industry is built on trying to define current growth potential and future valuation accurately. All the valuation information about Novan listed above have to be considered, but the key to understanding future value is determining which factors weigh more heavily than others.
Quarterly Earnings Growth YOY
-0.61
Market Capitalization
64.5 M
Quarterly Revenue Growth YOY
7.24
Return On Assets
-0.24
Return On Equity
-1.66
The market value of Novan Inc is measured differently than its book value, which is the value of Novan that is recorded on the company's balance sheet. Investors also form their own opinion of Novan's value that differs from its market value or its book value, called intrinsic value, which is Novan's true underlying value. Investors use various methods to calculate intrinsic value and buy a stock when its market value falls below its intrinsic value. Because Novan's market value can be influenced by many factors that don't directly affect Novan's underlying business (such as a pandemic or basic market pessimism), market value can vary widely from intrinsic value.
Please note, there is a significant difference between Novan's value and its price as these two are different measures arrived at by different means. Investors typically determine Novan value by looking at such factors as earnings, sales, fundamental and technical indicators, competition as well as analyst projections. However, Novan's price is the amount at which it trades on the open market and represents the number that a seller and buyer find agreeable to each party.