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Time Warner Inc (NYSE:TWX)
Beneish M-Score
-2.53 (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 -2.53 suggests that the company is not a manipulator.

TWX' s 10-Year Beneish M-Score Range
Min: -5.31   Max: 2.33
Current: -2.53

-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 -2.55.


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 * 0.9122+0.528 * 1.0121+0.404 * 0.978+0.892 * 1.1355+0.115 * 0.5526
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.085+4.679 * 0.0073-0.327 * 1.1828
=-2.53

* 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 + 10938 = $31,514 Mil.
Gross Profit was 2562 + 2863 + 3385 + 5216 = $14,026 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 $8,140 Mil.
Selling, General & Admin. Expense(SGA) was $6,945 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 + -52 = $-187 Mil.
Cash Flow from Operations was 632 + 338 + 1704 + 1146 = $3,820 Mil.
Accounts Receivable was $6,763 Mil.
Revenue was 6042 + 6608 + 6939 + 8164 = $27,753 Mil.
Gross Profit was 2884 + 2700 + 3189 + 3728 = $12,501 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 $2,628 Mil.
Selling, General & Admin. Expense(SGA) was $5,637 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 / 31514) / (6763 / 27753)
=0.22228216 / 0.24368537
=0.9122

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 / 27753) / (2562 / 31514)
=0.45043779 / 0.44507203
=1.0121

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
=31514 / 27753
=1.1355

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))
=(2628 / (2628 + 3692)) / (8140 / (8140 + 2678))
=0.41582278 / 0.75244962
=0.5526

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)
=(6945 / 31514) / (5637 / 27753)
=0.22037824 / 0.20311318
=1.085

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 - -187 - 3820) / 63095
=0.0073

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 -2.53 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 1.08391.15960.89021.13091.24241.18661.03071.00171.0761.0273
GMI 0.97590.98570.98491.05040.94010.99270.99551.00970.98130.9782
AQI 0.97511.00541.0130.97661.05980.89621.01490.99891.00521.0101
SGI 1.03611.02051.04431.06390.57050.95751.05911.07760.99151.0371
DEPI 0.92660.99471.15630.79920.58570.96243.34531.03280.28060.9885
SGAI 1.02511.23250.80920.81731.21530.94780.95250.97540.99190.9843
LVGI 0.87940.92991.35751.01450.81081.26061.00691.10811.01320.9862
TATA -0.028-0.0271-0.0285-0.0286-0.2077-0.0328-0.0057-0.0047-0.00440.0013
M-score -2.50-2.46-2.74-2.42-3.64-2.63-2.15-2.45-2.53-2.42

Time Warner Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.04571.07341.0761.14681.11361.13051.00270.95730.90940.9122
GMI 0.9941.00130.98130.95970.96980.96710.97190.99310.97851.0121
AQI 1.00380.99111.00520.99771.00311.02141.01010.990.97130.978
SGI 1.03881.00580.99150.98020.98510.96511.06261.08521.09671.1355
DEPI 1.030.31310.28060.27410.27251.48140.98850.95190.91290.5526
SGAI 0.97330.97340.99191.01310.9490.9191.01570.99371.04661.085
LVGI 1.06271.03741.01320.98690.97960.97240.98621.02511.12821.1828
TATA -0.0068-0.0106-0.0044-0.0068-0.01040.00430.0013-0.00480.00420.0073
M-score -2.45-2.55-2.53-2.50-2.52-2.30-2.43-2.49-2.54-2.53
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