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Time Warner Inc (NYSE:TWX)
Beneish M-Score
-2.41 (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 -2.41 suggests that the company is not a manipulator.

TWX' s Beneish M-Score Range Over the Past 10 Years
Min: -5.31   Max: 2.33
Current: -2.41

-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 -2.49.


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 * 0.9993+0.528 * 0.9673+0.404 * 1.0207+0.892 * 1.0223+0.115 * 1.0375
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9355+4.679 * 0.0105-0.327 * 1.0079
=-2.41

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $7,810 Mil.
Revenue was 7308 + 7079 + 6564 + 7348 = $28,299 Mil.
Gross Profit was 3303 + 2727 + 3038 + 3160 = $12,228 Mil.
Total Current Assets was $11,792 Mil.
Total Assets was $63,254 Mil.
Property, Plant and Equipment(Net PPE) was $2,546 Mil.
Depreciation, Depletion and Amortization(DDA) was $678 Mil.
Selling, General & Admin. Expense(SGA) was $4,886 Mil.
Total Current Liabilities was $7,194 Mil.
Long-Term Debt was $23,622 Mil.
Net Income was 1214 + 857 + 1035 + 971 = $4,077 Mil.
Non Operating Income was -40 + 40 + -54 + -125 = $-179 Mil.
Cash Flow from Operations was 753 + 850 + 1201 + 788 = $3,592 Mil.
Accounts Receivable was $7,645 Mil.
Revenue was 7127 + 7525 + 6243 + 6788 = $27,683 Mil.
Gross Profit was 3039 + 3107 + 2562 + 2863 = $11,571 Mil.
Total Current Assets was $12,495 Mil.
Total Assets was $62,195 Mil.
Property, Plant and Equipment(Net PPE) was $2,580 Mil.
Depreciation, Depletion and Amortization(DDA) was $720 Mil.
Selling, General & Admin. Expense(SGA) was $5,109 Mil.
Total Current Liabilities was $8,891 Mil.
Long-Term Debt was $21,172 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)
=(7810 / 28299) / (7645 / 27683)
=0.27598148 / 0.27616227
=0.9993

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)
=(11571 / 27683) / (12228 / 28299)
=0.41798216 / 0.43210007
=0.9673

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 - (11792 + 2546) / 63254) / (1 - (12495 + 2580) / 62195)
=0.77332659 / 0.75761717
=1.0207

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
=28299 / 27683
=1.0223

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))
=(720 / (720 + 2580)) / (678 / (678 + 2546))
=0.21818182 / 0.21029777
=1.0375

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)
=(4886 / 28299) / (5109 / 27683)
=0.17265628 / 0.1845537
=0.9355

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)
=((23622 + 7194) / 63254) / ((21172 + 8891) / 62195)
=0.48717868 / 0.48336683
=1.0079

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
=(4077 - -179 - 3592) / 63254
=0.0105

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 -2.41 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.91761.14470.70122.07021.04681.00171.0760.95381.15090.9341
GMI 0.9881.05070.9780.95260.99731.00970.98130.97821.08460.9865
AQI 1.0130.97661.05980.89621.01490.99891.00521.02680.97641.0189
SGI 1.01311.05111.01080.54881.04281.07760.99151.03710.91821.0277
DEPI 1.17420.79920.69620.79960.99673.50961.02280.25913.29231.0411
SGAI 0.99480.86971.04161.10320.95480.97540.99190.98430.87430.9044
LVGI 1.35751.01450.81081.26061.00691.10811.01320.9851.15321.0257
TATA -0.0213-0.0286-0.2217-0.0323-0.0057-0.0047-0.00440.00130.00430.0037
M-score -2.74-2.42-3.75-2.24-2.42-2.17-2.45-2.56-2.12-2.49

Time Warner Inc Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.92120.97090.92080.91921.05041.01371.10051.0040.93410.9993
GMI 0.96590.99910.9811.01981.04691.03571.03760.97440.98650.9673
AQI 1.02680.990.97130.9780.97641.01341.00521.01611.01891.0207
SGI 1.07381.07011.0831.12691.00611.02311.03691.0411.02771.0223
DEPI 0.86720.91990.733221.14150.86620.84251.01531.04281.04111.0375
SGAI 1.02630.9531.02271.08230.97261.0081.0010.96750.90440.9355
LVGI 0.9851.02511.12821.18281.15321.15651.08121.04081.02571.0079
TATA 0.0080.00150.01110.01460.00430.01250.0089-0.00050.00370.0105
M-score -2.47-2.45-2.53-0.13-2.45-2.43-2.32-2.45-2.49-2.41
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