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Starwood Hotels & Resorts Worldwide Inc (NYSE:HOT)
Beneish M-Score
-5.22 (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 -5.22 suggests that the company is not a manipulator.

HOT' s 10-Year Beneish M-Score Range
Min: -5.22   Max: 25.66
Current: -5.22

-5.22
25.66

During the past 13 years, the highest Beneish M-Score of Starwood Hotels & Resorts Worldwide Inc was 25.66. The lowest was -5.22. And the median was -2.67.


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 * 1.041+0.528 * 0.5166+0.404 * 1.0643+0.892 * 0.9762+0.115 * 0.8855
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 13.6895+4.679 * -0.0477-0.327 * 1.3189
=-5.22

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $624 Mil.
Revenue was 1493 + 1539 + 1458 + 1506 = $5,996 Mil.
Gross Profit was 1064 + 1100 + 1029 + 1051 = $4,244 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 $5,065 Mil.
Total Current Liabilities was $1,931 Mil.
Long-Term Debt was $2,354 Mil.
Net Income was 109 + 153 + 137 + 128 = $527 Mil.
Non Operating Income was -20 + 12 + -27 + -9 = $-44 Mil.
Cash Flow from Operations was 251 + 277 + 149 + 296 = $973 Mil.
Accounts Receivable was $614 Mil.
Revenue was 1508 + 1562 + 1539 + 1533 = $6,142 Mil.
Gross Profit was 1049 + 403 + 386 + 408 = $2,246 Mil.
Total Current Assets was $2,136 Mil.
Total Assets was $8,963 Mil.
Property, Plant and Equipment(Net PPE) was $3,097 Mil.
Depreciation, Depletion and Amortization(DDA) was $260 Mil.
Selling, General & Admin. Expense(SGA) was $379 Mil.
Total Current Liabilities was $1,900 Mil.
Long-Term Debt was $1,556 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)
=(624 / 5996) / (614 / 6142)
=0.10406938 / 0.09996744
=1.041

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)
=(1100 / 6142) / (1064 / 5996)
=0.36567893 / 0.7078052
=0.5166

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 - (1752 + 2942) / 8426) / (1 - (2136 + 3097) / 8963)
=0.44291479 / 0.41615531
=1.0643

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
=5996 / 6142
=0.9762

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))
=(260 / (260 + 3097)) / (282 / (282 + 2942))
=0.0774501 / 0.08746898
=0.8855

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)
=(5065 / 5996) / (379 / 6142)
=0.84472982 / 0.06170628
=13.6895

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)
=((2354 + 1931) / 8426) / ((1556 + 1900) / 8963)
=0.50854498 / 0.38558518
=1.3189

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
=(527 - -44 - 973) / 8426
=-0.0477

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 -5.22 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 0.92341.00940.95820.98891.06641.00010.91631.1342
GMI 00.97541.11951.14790.95870.97330.97170.3511
AQI 0.81091.04641.05241.03620.94810.92621.08580.9985
SGI 1.00031.02910.93520.81891.07621.10911.12390.9674
DEPI 1.18461.33740.63791.01811.09441.05371.01930.9092
SGAI 1.26981.05030.79361.01711.0180.92260.93528.3757
LVGI 0.99451.281.07860.89140.9670.87270.86650.946
TATA 0.0523-0.0378-0.0242-0.046-0.0264-0.0171-0.0562-0.0592
M-score -2.93-2.68-2.64-2.74-2.50-2.45-2.63-4.27

Starwood Hotels & Resorts Worldwide Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.87140.88120.91631.04451.05671.09861.13421.06081.05241.041
GMI 0.96380.96010.97170.94370.93530.65480.50930.42590.36070.5166
AQI 1.03191.05421.08581.07570.98031.00190.99851.01971.03641.0643
SGI 1.17311.16311.12391.01670.97640.9720.96740.98190.98720.9762
DEPI 1.22031.02141.01930.97690.95360.95740.90920.8770.93830.8855
SGAI 0.9070.91760.93520.97291.02411.06838.375710.281912.130813.6895
LVGI 0.80950.81810.86650.86270.92440.92610.9460.98121.04531.3189
TATA -0.0582-0.0685-0.0562-0.0416-0.0431-0.0407-0.0592-0.0577-0.0513-0.0477
M-score -2.62-2.69-2.63-2.57-2.68-2.78-4.18-4.61-4.94-5.22
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