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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.
Starwood Hotels & Resorts Worldwide Inc has a M-score of -4.96 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Starwood Hotels & Resorts Worldwide Inc was 10.78. The lowest was -4.96. And the median was -2.61.
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 Starwood Hotels & Resorts Worldwide 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 * 1.0339||+||0.528 * 0.3607||+||0.404 * 1.0364||+||0.892 * 0.9872||+||0.115 * 0.9383|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 12.1308||+||4.679 * -0.0513||-||0.327 * 1.0453|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $691 Mil.|
Revenue was 1539 + 1458 + 1506 + 1508 = $6,011 Mil.
Gross Profit was 1100 + 1029 + 1051 + 1049 = $4,229 Mil.
Total Current Assets was $1,922 Mil.
Total Assets was $8,746 Mil.
Property, Plant and Equipment(Net PPE) was $3,046 Mil.
Depreciation, Depletion and Amortization(DDA) was $275 Mil.
Selling, General & Admin. Expense(SGA) was $4,383 Mil.
Total Current Liabilities was $1,942 Mil.
Long-Term Debt was $1,637 Mil.
Net Income was 153 + 137 + 128 + 157 = $575 Mil.
Non Operating Income was 12 + -27 + -9 + 3 = $-21 Mil.
Cash Flow from Operations was 277 + 149 + 296 + 323 = $1,045 Mil.
|Accounts Receivable was $677 Mil.
Revenue was 1562 + 1539 + 1533 + 1455 = $6,089 Mil.
Gross Profit was 403 + 386 + 408 + 348 = $1,545 Mil.
Total Current Assets was $2,190 Mil.
Total Assets was $8,966 Mil.
Property, Plant and Equipment(Net PPE) was $3,039 Mil.
Depreciation, Depletion and Amortization(DDA) was $256 Mil.
Selling, General & Admin. Expense(SGA) was $366 Mil.
Total Current Liabilities was $1,924 Mil.
Long-Term Debt was $1,586 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)|
|=||(691 / 6011)||/||(677 / 6089)|
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)|
|=||(1029 / 6089)||/||(1100 / 6011)|
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 - (1922 + 3046) / 8746)||/||(1 - (2190 + 3039) / 8966)|
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))|
|=||(256 / (256 + 3039))||/||(275 / (275 + 3046))|
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)|
|=||(4383 / 6011)||/||(366 / 6089)|
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)|
|=||((1637 + 1942) / 8746)||/||((1586 + 1924) / 8966)|
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|
|=||(575 - -21||-||1045)||/||8746|
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.
Starwood Hotels & Resorts Worldwide Inc has a M-score of -4.96 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
Starwood Hotels & Resorts Worldwide Inc Annual Data
Starwood Hotels & Resorts Worldwide Inc Quarterly Data