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Starwood Hotels & Resorts Worldwide Inc (NYSE:HOT)
Beneish M-Score
-4.96 (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 -4.96 suggests that the company is not a manipulator.

HOT' s 10-Year Beneish M-Score Range
Min: -4.96   Max: 10.78
Current: -4.96

-4.96
10.78

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.


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 * 1.0339+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
=-4.96

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

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

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)
=(691 / 6011) / (677 / 6089)
=0.11495591 / 0.1111841
=1.0339

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)
=(1029 / 6089) / (1100 / 6011)
=0.25373625 / 0.7035435
=0.3607

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 - (1922 + 3046) / 8746) / (1 - (2190 + 3039) / 8966)
=0.4319689 / 0.41679679
=1.0364

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
=6011 / 6089
=0.9872

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))
=0.07769347 / 0.08280638
=0.9383

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)
=0.7291632 / 0.06010839
=12.1308

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)
=0.40921564 / 0.39147892
=1.0453

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
=(575 - -21 - 1045) / 8746
=-0.0513

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.


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 0.92341.00940.93341.01511.18910.99780.9151.1067
GMI 00.97261.06461.21050.95870.97330.97170.3511
AQI 0.78581.04640.98911.10250.94810.92621.08580.9985
SGI 1.00031.02910.960.79771.07621.10911.12390.9674
DEPI 1.24241.33740.88080.73731.09441.05371.01930.9092
SGAI 1.26981.06060.96850.82521.0180.92260.93528.3757
LVGI 0.99131.281.07860.89140.9670.87270.86650.946
TATA 0.0523-0.039-0.0242-0.046-0.0264-0.0171-0.0562-0.0592
M-score -2.94-2.69-2.69-2.67-2.39-2.45-2.63-4.29

Starwood Hotels & Resorts Worldwide Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.87220.87510.8850.9151.041.05531.09551.10671.03991.0339
GMI 0.97250.96380.96010.97170.94370.93530.65480.50930.42590.3607
AQI 0.92081.03191.05421.08581.07570.98031.00190.99851.01971.0364
SGI 1.1671.17311.16311.12391.01670.97640.9720.96740.98190.9872
DEPI 1.0691.22031.02141.01930.97690.95360.95740.90920.8770.9383
SGAI 0.90610.9070.91760.93520.97291.02411.06838.375710.281912.1308
LVGI 0.85120.80950.81810.86650.86270.92440.92610.9460.98121.0453
TATA -0.0379-0.0582-0.0685-0.0562-0.0416-0.0431-0.0407-0.0592-0.0577-0.0513
M-score -2.60-2.62-2.68-2.63-2.58-2.68-2.78-4.21-4.63-4.96
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