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Starwood Hotels & Resorts Worldwide Inc (NYSE:HOT)
Beneish M-Score
-2.75 (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.

Starwood Hotels & Resorts Worldwide Inc has a M-score of -2.74 suggests that the company is not a manipulator.

HOT' s 10-Year Beneish M-Score Range
Min: -3.93   Max: -1.35
Current: -2.75

-3.93
-1.35

During the past 13 years, the highest Beneish M-Score of Starwood Hotels & Resorts Worldwide Inc was -1.35. The lowest was -3.93. And the median was -2.72.


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 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 * 1.1067+0.528 * 0.9189+0.404 * 0.9915+0.892 * 0.9674+0.115 * 0.9092
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0997+4.679 * -0.0592-0.327 * 0.9487
=-2.74

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Dec13) TTM:Last Year (Dec12) TTM:
Accounts Receivable was $697 Mil.
Revenue was 1506 + 1508 + 1562 + 1539 = $6,115 Mil.
Gross Profit was 1051 + 1049 + 403 + 386 = $2,889 Mil.
Total Current Assets was $1,996 Mil.
Total Assets was $8,762 Mil.
Property, Plant and Equipment(Net PPE) was $3,034 Mil.
Depreciation, Depletion and Amortization(DDA) was $267 Mil.
Selling, General & Admin. Expense(SGA) was $2,998 Mil.
Total Current Liabilities was $1,924 Mil.
Long-Term Debt was $1,523 Mil.
Net Income was 128 + 157 + 137 + 213 = $635 Mil.
Non Operating Income was -9 + 3 + 9 + 0 = $3 Mil.
Cash Flow from Operations was 296 + 323 + 320 + 212 = $1,151 Mil.
Accounts Receivable was $651 Mil.
Revenue was 1533 + 1455 + 1618 + 1715 = $6,321 Mil.
Gross Profit was 1028 + 951 + 390 + 375 = $2,744 Mil.
Total Current Assets was $1,889 Mil.
Total Assets was $8,855 Mil.
Property, Plant and Equipment(Net PPE) was $3,162 Mil.
Depreciation, Depletion and Amortization(DDA) was $251 Mil.
Selling, General & Admin. Expense(SGA) was $2,818 Mil.
Total Current Liabilities was $2,016 Mil.
Long-Term Debt was $1,656 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)
=(697 / 6115) / (651 / 6321)
=0.11398201 / 0.10299003
=1.1067

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)
=(1049 / 6321) / (1051 / 6115)
=0.43410853 / 0.47244481
=0.9189

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 - (1996 + 3034) / 8762) / (1 - (1889 + 3162) / 8855)
=0.42593015 / 0.4295878
=0.9915

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
=6115 / 6321
=0.9674

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))
=(251 / (251 + 3162)) / (267 / (267 + 3034))
=0.07354234 / 0.08088458
=0.9092

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)
=(2998 / 6115) / (2818 / 6321)
=0.49026983 / 0.44581554
=1.0997

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)
=((1523 + 1924) / 8762) / ((1656 + 2016) / 8855)
=0.39340333 / 0.41468097
=0.9487

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
=(635 - 3 - 1151) / 8762
=-0.0592

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 -2.74 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 own currency.

Starwood Hotels & Resorts Worldwide Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.92341.00940.95820.98781.19030.99780.9151.1067
GMI 00.97541.11951.1440.9620.97330.37240.9162
AQI 0.81091.04641.05241.03670.94760.93551.08250.9915
SGI 1.00031.02910.93520.81611.07991.10911.12390.9674
DEPI 1.18461.33740.63791.01811.09441.04241.03040.9092
SGAI 1.26981.05030.79361.02051.01450.92267.12291.0997
LVGI 0.99451.281.07860.89140.9670.87270.86410.9487
TATA 0.0523-0.0378-0.0242-0.046-0.0263-0.0154-0.0562-0.0592
M-score -2.93-2.68-2.64-2.75-2.38-2.44-4.01-2.75

Starwood Hotels & Resorts Worldwide Inc Quarterly Data

Sep11Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13
DSRI 0.99190.99780.87220.87510.8850.9151.041.05531.09551.1067
GMI 0.97190.97330.97250.96380.68650.53860.52480.52210.71760.9189
AQI 0.87840.93550.92081.03191.05421.08251.07570.98031.00190.9915
SGI 1.09161.10911.1671.17311.16311.12391.01670.97640.9720.9674
DEPI 1.10871.04241.0691.07591.02141.03040.97690.95360.95740.9092
SGAI 0.92970.92260.90610.9070.91767.12297.51577.87417.96841.0997
LVGI 0.88070.87270.85120.80950.81810.86410.86270.92440.92610.9487
TATA -0.0148-0.0154-0.0362-0.0547-0.0652-0.0562-0.0416-0.0447-0.0424-0.0592
M-score -2.48-2.44-2.59-2.62-2.81-3.93-3.92-4.08-3.94-2.74
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