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Starwood Hotels & Resorts Worldwide Inc (NYSE:HOT)
Beneish M-Score
-2.65 (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 -2.65 suggests that the company is not a manipulator.

HOT' s Beneish M-Score Range Over the Past 10 Years
Min: -2.93   Max: -1.35
Current: -2.65

-2.93
-1.35

During the past 13 years, the highest Beneish M-Score of Starwood Hotels & Resorts Worldwide Inc was -1.35. The lowest was -2.93. And the median was -2.64.


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 * 1.0837+0.528 * 0.999+0.404 * 1.0826+0.892 * 0.9632+0.115 * 0.8399
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.002+4.679 * -0.0533-0.327 * 0.941
=-2.65

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $690 Mil.
Revenue was 1433 + 1434 + 1481 + 1415 = $5,763 Mil.
Gross Profit was 393 + 380 + 391 + 344 = $1,508 Mil.
Total Current Assets was $2,295 Mil.
Total Assets was $8,268 Mil.
Property, Plant and Equipment(Net PPE) was $2,144 Mil.
Depreciation, Depletion and Amortization(DDA) was $280 Mil.
Selling, General & Admin. Expense(SGA) was $388 Mil.
Total Current Liabilities was $2,236 Mil.
Long-Term Debt was $2,278 Mil.
Net Income was 166 + 88 + 136 + 99 = $489 Mil.
Non Operating Income was 41 + -41 + 11 + 29 = $40 Mil.
Cash Flow from Operations was 199 + 331 + 305 + 55 = $890 Mil.
Accounts Receivable was $661 Mil.
Revenue was 1493 + 1493 + 1539 + 1458 = $5,983 Mil.
Gross Profit was 423 + 378 + 406 + 357 = $1,564 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 $402 Mil.
Total Current Liabilities was $2,450 Mil.
Long-Term Debt was $2,574 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)
=(690 / 5763) / (661 / 5983)
=0.11972931 / 0.11047969
=1.0837

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)
=(380 / 5983) / (393 / 5763)
=0.26140732 / 0.26166927
=0.999

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 - (2295 + 2144) / 8268) / (1 - (2321 + 2634) / 8659)
=0.46311079 / 0.42776302
=1.0826

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
=5763 / 5983
=0.9632

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))
=(283 / (283 + 2634)) / (280 / (280 + 2144))
=0.09701748 / 0.11551155
=0.8399

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)
=(388 / 5763) / (402 / 5983)
=0.06732605 / 0.06719037
=1.002

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)
=((2278 + 2236) / 8268) / ((2574 + 2450) / 8659)
=0.54596033 / 0.58020557
=0.941

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
=(489 - 40 - 890) / 8268
=-0.0533

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 -2.65 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.92341.00940.95820.98781.06761.00010.91631.13421.05071.0837
GMI 3.65690.97541.11951.1440.9620.97330.97170.93310.98650.999
AQI 0.81091.04641.05241.03670.94760.93551.08250.99151.00431.0826
SGI 1.00031.02910.93520.81611.07991.10911.12390.96740.97840.9632
DEPI 1.18461.33740.63791.01811.09441.04241.03040.90920.83370.8399
SGAI 1.26981.05030.79361.02051.01450.92260.93521.07281.071.002
LVGI 0.99451.281.07860.89140.9670.87270.86410.94871.47480.941
TATA 0.0523-0.0378-0.0242-0.046-0.0263-0.0154-0.0562-0.0592-0.0409-0.0533
M-score -1.00-2.68-2.64-2.75-2.49-2.43-2.63-2.71-2.84-2.65

Starwood Hotels & Resorts Worldwide Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1.09861.13421.06081.05241.0411.05071.11331.07781.08911.0837
GMI 0.9290.93310.97180.98341.00150.98650.98250.98810.97430.999
AQI 1.00190.99151.01971.03641.06431.00431.05251.04581.00191.0826
SGI 0.9720.96740.98190.98720.97620.97840.98440.97850.97110.9632
DEPI 0.95740.90920.8770.93830.88550.83370.83130.75220.76040.8399
SGAI 1.06831.07281.08831.11541.07841.071.03931.00161.03491.002
LVGI 0.92610.94870.98121.04531.31891.47481.49831.33521.07870.941
TATA -0.0424-0.0592-0.0579-0.0525-0.0496-0.0409-0.0433-0.0482-0.0564-0.0533
M-score -2.64-2.71-2.74-2.72-2.80-2.84-2.77-2.78-2.76-2.65
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