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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.
Waters Corp has a M-score of -2.54 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Waters Corp was -2.19. The lowest was -3.02. And the median was -2.56.
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 Waters Corp 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 * 1.0255||+||0.528 * 1.0282||+||0.404 * 0.9826||+||0.892 * 0.9793||+||0.115 * 1.0199|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.017||+||4.679 * -0.02||-||0.327 * 0.9387|
* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was €291 Mil.|
Revenue was 311.736422882 + 415.160058737 + 335.276392962 + 344.625668449 = €1,407 Mil.
Gross Profit was 175.806661839 + 247.031571219 + 194.830645161 + 200.753246753 = €818 Mil.
Total Current Assets was €1,888 Mil.
Total Assets was €2,643 Mil.
Property, Plant and Equipment(Net PPE) was €239 Mil.
Depreciation, Depletion and Amortization(DDA) was €60 Mil.
Selling, General & Admin. Expense(SGA) was €370 Mil.
Total Current Liabilities was €423 Mil.
Long-Term Debt was €797 Mil.
Net Income was 50.906589428 + 103.95154185 + 71.8826979472 + 68.230710466 = €295 Mil.
Non Operating Income was 0 + 0 + 0 + -1.20320855615 = €-1 Mil.
Cash Flow from Operations was 83.8196958726 + 105.206314244 + 76.8071847507 + 83.2864782277 = €349 Mil.
|Accounts Receivable was €289 Mil.
Revenue was 330.013803681 + 392.305263158 + 346.917501928 + 367.343368592 = €1,437 Mil.
Gross Profit was 196.142638037 + 235.641353383 + 206.052428682 + 221.485760781 = €859 Mil.
Total Current Assets was €1,754 Mil.
Total Assets was €2,460 Mil.
Property, Plant and Equipment(Net PPE) was €217 Mil.
Depreciation, Depletion and Amortization(DDA) was €56 Mil.
Selling, General & Admin. Expense(SGA) was €372 Mil.
Total Current Liabilities was €366 Mil.
Long-Term Debt was €844 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)|
|=||(290.663287473 / 1406.79854303)||/||(289.426380368 / 1436.57993736)|
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)|
|=||(247.031571219 / 1436.57993736)||/||(175.806661839 / 1406.79854303)|
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 - (1888.27588704 + 238.87038378) / 2642.82041999)||/||(1 - (1754.35659509 + 216.806748466) / 2459.59892638)|
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))|
|=||(56.188343079 / (56.188343079 + 216.806748466))||/||(60.3901210656 / (60.3901210656 + 238.87038378))|
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)|
|=||(370.046700718 / 1406.79854303)||/||(371.573820043 / 1436.57993736)|
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)|
|=||((796.524257784 + 423.206372194) / 2642.82041999)||/||((843.558282209 + 365.694785276) / 2459.59892638)|
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|
|=||(294.971539691 - -1.20320855615||-||349.119673095)||/||2642.82041999|
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.
Waters Corp has a M-score of -2.54 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
Waters Corp Annual Data
Waters Corp Quarterly Data