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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 Corporation has a M-score of -2.47 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Waters Corporation was -2.32. The lowest was -2.96. And the median was -2.49.
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 Corporation 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 * 1.041||+||0.528 * 1.0193||+||0.404 * 0.9735||+||0.892 * 0.9993||+||0.115 * 1.0289|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0001||+||4.679 * -0.0096||-||0.327 * 0.9575|
|This Year (Dec13) TTM:||Last Year (Dec12) TTM:|
|Accounts Receivable was €316 Mil.|
Revenue was 415.160058737 + 335.276392962 + 344.625668449 + 330.013803681 = €1,425 Mil.
Gross Profit was 247.031571219 + 194.830645161 + 200.753246753 + 196.142638037 = €839 Mil.
Total Current Assets was €1,877 Mil.
Total Assets was €2,630 Mil.
Property, Plant and Equipment(Net PPE) was €239 Mil.
Depreciation, Depletion and Amortization(DDA) was €60 Mil.
Selling, General & Admin. Expense(SGA) was €369 Mil.
Total Current Liabilities was €358 Mil.
Long-Term Debt was €874 Mil.
Net Income was 103.95154185 + 71.8826979472 + 68.230710466 + 92.8366564417 = €337 Mil.
Non Operating Income was 0 + 0 + -1.20320855615 + 0 = €-1 Mil.
Cash Flow from Operations was 105.206314244 + 76.8071847507 + 83.2864782277 + 98.004601227 = €363 Mil.
|Accounts Receivable was €304 Mil.
Revenue was 392.305263158 + 346.917501928 + 367.343368592 + 319.496960486 = €1,426 Mil.
Gross Profit was 235.641353383 + 206.052428682 + 221.485760781 + 192.376899696 = €856 Mil.
Total Current Assets was €1,698 Mil.
Total Assets was €2,382 Mil.
Property, Plant and Equipment(Net PPE) was €205 Mil.
Depreciation, Depletion and Amortization(DDA) was €53 Mil.
Selling, General & Admin. Expense(SGA) was €370 Mil.
Total Current Liabilities was €379 Mil.
Long-Term Debt was €786 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)|
|=||(316.435389134 / 1425.07592383)||/||(304.177443609 / 1426.06309416)|
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)|
|=||(194.830645161 / 1426.06309416)||/||(247.031571219 / 1425.07592383)|
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 - (1876.83920705 + 238.569750367) / 2630.41776799)||/||(1 - (1697.53834586 + 205.472932331) / 2382.06766917)|
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))|
|=||(53.254410545 / (53.254410545 + 205.472932331))||/||(59.6648164273 / (59.6648164273 + 238.569750367))|
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)|
|=||(369.345588338 / 1425.07592383)||/||(369.573088136 / 1426.06309416)|
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)|
|=||((873.715124816 + 357.953010279) / 2630.41776799)||/||((785.714285714 + 379.129323308) / 2382.06766917)|
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|
|=||(336.901606705 - -1.20320855615||-||363.304578449)||/||2630.41776799|
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 Corporation has a M-score of -2.47 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 Corporation Annual Data
Waters Corporation Quarterly Data