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Starwood Hotels & Resorts Worldwide Inc (NYSE:HOT)
Beneish M-Score
-2.76 (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 -2.76 suggests that the company is not a manipulator.

HOT' s Beneish M-Score Range Over the Past 10 Years
Min: -5.17   Max: -0.01
Current: -2.76

-5.17
-0.01

During the past 13 years, the highest Beneish M-Score of Starwood Hotels & Resorts Worldwide Inc was -0.01. The lowest was -5.17. And the median was -2.68.


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 * 1.0891+0.528 * 0.9743+0.404 * 1.0019+0.892 * 0.9711+0.115 * 0.7604
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0349+4.679 * -0.0564-0.327 * 1.0787
=-2.76

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $660 Mil.
Revenue was 1434 + 1481 + 1415 + 1493 = $5,823 Mil.
Gross Profit was 380 + 391 + 344 + 423 = $1,538 Mil.
Total Current Assets was $2,368 Mil.
Total Assets was $8,185 Mil.
Property, Plant and Equipment(Net PPE) was $2,185 Mil.
Depreciation, Depletion and Amortization(DDA) was $284 Mil.
Selling, General & Admin. Expense(SGA) was $401 Mil.
Total Current Liabilities was $2,479 Mil.
Long-Term Debt was $2,011 Mil.
Net Income was 88 + 136 + 99 + 234 = $557 Mil.
Non Operating Income was -41 + 11 + 29 + 28 = $27 Mil.
Cash Flow from Operations was 331 + 305 + 55 + 301 = $992 Mil.
Accounts Receivable was $624 Mil.
Revenue was 1493 + 1539 + 1458 + 1506 = $5,996 Mil.
Gross Profit was 378 + 406 + 357 + 402 = $1,543 Mil.
Total Current Assets was $1,752 Mil.
Total Assets was $8,426 Mil.
Property, Plant and Equipment(Net PPE) was $2,942 Mil.
Depreciation, Depletion and Amortization(DDA) was $282 Mil.
Selling, General & Admin. Expense(SGA) was $399 Mil.
Total Current Liabilities was $1,931 Mil.
Long-Term Debt was $2,354 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)
=(660 / 5823) / (624 / 5996)
=0.11334364 / 0.10406938
=1.0891

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)
=(391 / 5996) / (380 / 5823)
=0.25733823 / 0.26412502
=0.9743

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 - (2368 + 2185) / 8185) / (1 - (1752 + 2942) / 8426)
=0.44373855 / 0.44291479
=1.0019

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
=5823 / 5996
=0.9711

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))
=(282 / (282 + 2942)) / (284 / (284 + 2185))
=0.08746898 / 0.11502633
=0.7604

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)
=(401 / 5823) / (399 / 5996)
=0.06886485 / 0.06654436
=1.0349

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)
=((2011 + 2479) / 8185) / ((2354 + 1931) / 8426)
=0.54856445 / 0.50854498
=1.0787

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
=(557 - 27 - 992) / 8185
=-0.0564

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 -2.76 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.92341.00940.95820.98781.06761.00010.91631.13421.0507
GMI 00.97541.11951.1440.9620.97330.97170.93310.9865
AQI 0.81091.04641.05241.03670.94760.93551.08250.99151.0043
SGI 1.00031.02910.93520.81611.07991.10911.12390.96740.9784
DEPI 1.18461.33740.63791.01811.09441.04241.03040.90920.8337
SGAI 1.26981.05030.79361.02051.01450.92260.93521.07281.07
LVGI 0.99451.281.07860.89140.9670.87270.86410.94871.4748
TATA 0.0523-0.0378-0.0242-0.046-0.0263-0.0154-0.0562-0.0592-0.0409
M-score -2.93-2.68-2.64-2.75-2.49-2.43-2.63-2.71-2.84

Starwood Hotels & Resorts Worldwide Inc Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 1.05671.09861.13421.06081.05241.0411.05071.11331.07781.0891
GMI 0.93530.9290.93310.97180.98341.00150.98650.98250.98810.9743
AQI 0.98031.00190.99151.01971.03641.06431.00431.05251.04581.0019
SGI 0.97640.9720.96740.98190.98720.97620.97840.98440.97850.9711
DEPI 0.95360.95740.90920.8770.93830.88550.83370.83130.75220.7604
SGAI 1.02411.06831.07281.08831.11541.07841.071.03931.00161.0349
LVGI 0.92440.92610.94870.98121.04531.31891.47481.49831.33521.0787
TATA -0.0447-0.0424-0.0592-0.0579-0.0525-0.0496-0.0409-0.0433-0.0482-0.0564
M-score -2.68-2.64-2.71-2.74-2.72-2.80-2.84-2.77-2.78-2.76
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