Switch to:
Time Warner Inc (NYSE:TWX)
Beneish M-Score
-2.39 (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.

Time Warner Inc has a M-score of -2.39 suggests that the company is not a manipulator.

TWX' s 10-Year Beneish M-Score Range
Min: -5.31   Max: 2.33
Current: -2.39

-5.31
2.33

During the past 13 years, the highest Beneish M-Score of Time Warner Inc was 2.33. The lowest was -5.31. And the median was -2.57.


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 Time Warner 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 * 1.0448+0.528 * 1.0626+0.404 * 0.978+0.892 * 0.9914+0.115 * 1.2087
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9233+4.679 * 0.0114-0.327 * 1.1828
=-2.39

* 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 $7,005 Mil.
Revenue was 6243 + 6788 + 7545 + 8565 = $29,141 Mil.
Gross Profit was 2562 + 2863 + 3385 + 3789 = $12,599 Mil.
Total Current Assets was $12,893 Mil.
Total Assets was $63,095 Mil.
Property, Plant and Equipment(Net PPE) was $2,678 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,844 Mil.
Selling, General & Admin. Expense(SGA) was $5,836 Mil.
Total Current Liabilities was $8,724 Mil.
Long-Term Debt was $21,389 Mil.
Net Income was 967 + 850 + 1292 + 983 = $4,092 Mil.
Non Operating Income was -135 + 6 + -6 + -49 = $-184 Mil.
Cash Flow from Operations was 632 + 338 + 1704 + 883 = $3,557 Mil.
Accounts Receivable was $6,763 Mil.
Revenue was 6856 + 7435 + 6939 + 8164 = $29,394 Mil.
Gross Profit was 3373 + 3214 + 3189 + 3728 = $13,504 Mil.
Total Current Assets was $11,581 Mil.
Total Assets was $66,453 Mil.
Property, Plant and Equipment(Net PPE) was $3,692 Mil.
Depreciation, Depletion and Amortization(DDA) was $6,089 Mil.
Selling, General & Admin. Expense(SGA) was $6,376 Mil.
Total Current Liabilities was $7,668 Mil.
Long-Term Debt was $19,145 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)
=(7005 / 29141) / (6763 / 29394)
=0.24038297 / 0.23008097
=1.0448

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)
=(2863 / 29394) / (2562 / 29141)
=0.45941349 / 0.43234618
=1.0626

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 - (12893 + 2678) / 63095) / (1 - (11581 + 3692) / 66453)
=0.75321341 / 0.77016839
=0.978

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
=29141 / 29394
=0.9914

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))
=(6089 / (6089 + 3692)) / (2844 / (2844 + 2678))
=0.62253348 / 0.51503079
=1.2087

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)
=(5836 / 29141) / (6376 / 29394)
=0.20026766 / 0.21691502
=0.9233

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)
=((21389 + 8724) / 63095) / ((19145 + 7668) / 66453)
=0.47726444 / 0.40348818
=1.1828

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
=(4092 - -184 - 3557) / 63095
=0.0114

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.

Time Warner Inc has a M-score of -2.39 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.

Time Warner Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.08391.15960.89021.13091.24241.01641.20331.00171.0761.0273
GMI 0.97590.98570.98491.05040.94010.99090.99731.00970.98130.9782
AQI 0.97511.00541.0130.97661.05980.90661.00330.99891.00581.0095
SGI 1.03611.02051.04431.06390.57050.97241.04281.07760.99151.0371
DEPI 0.92660.99471.15630.79920.58570.95390.99323.50961.02280.2712
SGAI 1.02511.23250.80920.81731.21530.94550.95480.97540.99190.9843
LVGI 0.87940.92991.35751.01450.81081.23131.03081.10811.01110.9883
TATA -0.028-0.0271-0.0285-0.0286-0.2077-0.0325-0.0057-0.0047-0.00440.0013
M-score -2.50-2.46-2.74-2.42-3.64-2.76-2.28-2.17-2.45-2.50

Time Warner Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.04571.07341.0761.14681.08221.06741.02730.98040.98481.0448
GMI 0.9941.00130.98130.95970.95940.94820.97820.99961.00561.0626
AQI 1.00380.99111.00580.99771.00311.02141.00950.990.97130.978
SGI 1.03881.00580.99150.98021.01371.02211.03711.05971.01270.9914
DEPI 2.86172.30251.0228-1.54130.96210.29840.27120.26740.25911.2087
SGAI 0.97330.97340.99191.01310.98070.98140.98430.96290.94980.9233
LVGI 1.06271.03741.01110.98690.97960.97240.98831.02511.12821.1828
TATA -0.0068-0.0106-0.0044-0.0068-0.01030.00040.0013-0.00480.00410.0114
M-score -2.24-2.32-2.45-2.71-2.45-2.48-2.50-2.56-2.59-2.39
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK