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Time Warner Inc (NYSE:TWX)
Beneish M-Score
-2.37 (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 -2.37 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: -2.37

-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 * 1.0991+0.528 * 0.9906+0.404 * 0.9938+0.892 * 0.998+0.115 * 0.9744
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9773+4.679 * 0.004-0.327 * 0.9783
=-2.37

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $8,031 Mil.
Revenue was 7167 + 6952 + 7308 + 7079 = $28,506 Mil.
Gross Profit was 3294 + 3112 + 3303 + 2727 = $12,436 Mil.
Total Current Assets was $13,264 Mil.
Total Assets was $65,764 Mil.
Property, Plant and Equipment(Net PPE) was $2,482 Mil.
Depreciation, Depletion and Amortization(DDA) was $682 Mil.
Selling, General & Admin. Expense(SGA) was $4,932 Mil.
Total Current Liabilities was $7,539 Mil.
Long-Term Debt was $24,419 Mil.
Net Income was 1467 + 952 + 1214 + 857 = $4,490 Mil.
Non Operating Income was -27 + -131 + -40 + 40 = $-158 Mil.
Cash Flow from Operations was 1568 + 1213 + 753 + 854 = $4,388 Mil.
Accounts Receivable was $7,322 Mil.
Revenue was 6564 + 7348 + 7127 + 7525 = $28,564 Mil.
Gross Profit was 3038 + 3160 + 3039 + 3107 = $12,344 Mil.
Total Current Assets was $12,139 Mil.
Total Assets was $62,674 Mil.
Property, Plant and Equipment(Net PPE) was $2,569 Mil.
Depreciation, Depletion and Amortization(DDA) was $683 Mil.
Selling, General & Admin. Expense(SGA) was $5,057 Mil.
Total Current Liabilities was $8,403 Mil.
Long-Term Debt was $22,728 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)
=(8031 / 28506) / (7322 / 28564)
=0.28173016 / 0.25633665
=1.0991

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)
=(12344 / 28564) / (12436 / 28506)
=0.43215236 / 0.43625903
=0.9906

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 - (13264 + 2482) / 65764) / (1 - (12139 + 2569) / 62674)
=0.76056809 / 0.76532533
=0.9938

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
=28506 / 28564
=0.998

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))
=(683 / (683 + 2569)) / (682 / (682 + 2482))
=0.2100246 / 0.21554994
=0.9744

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)
=(4932 / 28506) / (5057 / 28564)
=0.17301621 / 0.17704103
=0.9773

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)
=((24419 + 7539) / 65764) / ((22728 + 8403) / 62674)
=0.48594976 / 0.49671315
=0.9783

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
=(4490 - -158 - 4388) / 65764
=0.004

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 -2.37 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 local exchange's currency.

Time Warner Inc Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.89021.13091.24241.18661.03071.00171.22060.94671.02210.9341
GMI 0.98491.05040.94010.99270.99551.00971.02960.97451.03770.9865
AQI 1.0130.97661.05980.89621.01490.99891.00521.02680.97641.0189
SGI 1.04431.06390.57050.95751.05911.07760.87411.04491.03391.0277
DEPI 1.15631.49530.3130.96243.34530.29214.10680.86720.86621.0411
SGAI 0.80920.81731.21530.94780.95250.97540.85520.98111.01740.9044
LVGI 1.35751.01450.81081.26061.00691.10811.01320.9851.15321.0257
TATA -0.0213-0.0286-0.2077-0.0328-0.0057-0.00460.00220.0080.00430.0037
M-score -2.71-2.34-3.67-2.63-2.15-2.54-1.98-2.46-2.47-2.49

Time Warner Inc Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 0.92080.91921.05041.01371.10051.0040.93410.99930.9881.0991
GMI 0.9811.01981.04691.03571.03760.97440.98650.96730.96270.9906
AQI 0.97130.9780.97641.01341.00521.01611.01891.02071.02270.9938
SGI 1.0831.12691.00611.02311.03691.0411.02771.02230.9880.998
DEPI 0.733221.14150.86620.84251.01531.04281.04111.03751.00240.9744
SGAI 1.02271.08230.97261.0081.0010.96750.90440.93550.96410.9773
LVGI 1.12821.18281.15321.15651.08121.04081.02571.00790.98640.9783
TATA 0.01110.01460.00430.01250.0089-0.00040.00370.01050.00350.004
M-score -2.53-0.13-2.45-2.43-2.32-2.45-2.49-2.41-2.48-2.37
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