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Starwood Hotels & Resorts Worldwide Inc (NYSE:HOT)
Beneish M-Score
-2.85 (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 -2.85 suggests that the company is not a manipulator.

HOT' s 10-Year Beneish M-Score Range
Min: -3.93   Max: -1.35
Current: -2.85

-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 -2.68.


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 * 1.0507+0.528 * 0.9592+0.404 * 1.0043+0.892 * 0.9784+0.115 * 0.8337
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0613+4.679 * -0.0409-0.327 * 1.4748
=-2.85

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $661 Mil.
Revenue was 1493 + 1493 + 1539 + 1458 = $5,983 Mil.
Gross Profit was 1082 + 1064 + 1100 + 1029 = $4,275 Mil.
Total Current Assets was $2,321 Mil.
Total Assets was $8,659 Mil.
Property, Plant and Equipment(Net PPE) was $2,634 Mil.
Depreciation, Depletion and Amortization(DDA) was $283 Mil.
Selling, General & Admin. Expense(SGA) was $3,113 Mil.
Total Current Liabilities was $2,450 Mil.
Long-Term Debt was $2,574 Mil.
Net Income was 234 + 109 + 153 + 137 = $633 Mil.
Non Operating Income was 28 + -20 + 12 + -27 = $-7 Mil.
Cash Flow from Operations was 317 + 251 + 277 + 149 = $994 Mil.
Accounts Receivable was $643 Mil.
Revenue was 1506 + 1508 + 1562 + 1539 = $6,115 Mil.
Gross Profit was 1051 + 1049 + 1071 + 1020 = $4,191 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.



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)
=(661 / 5983) / (643 / 6115)
=0.11047969 / 0.10515127
=1.0507

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)
=(1064 / 6115) / (1082 / 5983)
=0.68536386 / 0.71452449
=0.9592

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 - (2321 + 2634) / 8659) / (1 - (1996 + 3034) / 8762)
=0.42776302 / 0.42593015
=1.0043

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
=5983 / 6115
=0.9784

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))
=(267 / (267 + 3034)) / (283 / (283 + 2634))
=0.08088458 / 0.09701748
=0.8337

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)
=(3113 / 5983) / (2998 / 6115)
=0.52030754 / 0.49026983
=1.0613

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)
=((2574 + 2450) / 8659) / ((1523 + 1924) / 8762)
=0.58020557 / 0.39340333
=1.4748

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
=(633 - -7 - 994) / 8659
=-0.0409

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 -2.85 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 00.97541.11951.1440.9620.97330.37240.91620.9592
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 1.26981.05030.79361.02051.01450.92267.12291.09971.0613
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 -2.93-2.68-2.64-2.75-2.49-2.43-4.01-2.72-2.85

Starwood Hotels & Resorts Worldwide Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.88120.91631.04451.05671.09861.13421.06081.05241.0411.0507
GMI 0.68650.53860.42660.35510.49350.63340.79230.95010.95870.9592
AQI 1.05421.08251.07570.98031.00190.99151.01971.03641.06431.0043
SGI 1.16311.12391.01670.97640.9720.96740.98190.98720.97620.9784
DEPI 1.02141.03040.97690.95360.95740.90920.8770.93830.88550.8337
SGAI 0.91767.12299.210211.517413.50711.09970.89870.75830.66271.0613
LVGI 0.81810.86410.86270.92440.92610.94870.98121.04531.31891.4748
TATA -0.0652-0.0562-0.0416-0.0447-0.0424-0.0592-0.0577-0.0513-0.0477-0.0409
M-score -2.82-3.92-4.26-4.80-5.01-2.87-2.80-2.68-2.74-2.85
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