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Time Warner Inc (NYSE:TWX)
Beneish M-Score
-2.43 (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 -2.43 suggests that the company is not a manipulator.

TWX' s 10-Year Beneish M-Score Range
Min: -5.31   Max: 2.33
Current: -2.43

-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 -2.52.


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 * 1.0137+0.528 * 1.0357+0.404 * 1.0134+0.892 * 1.0231+0.115 * 0.8425
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.008+4.679 * 0.0126-0.327 * 1.1565
=-2.43

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

This Year (Mar15) TTM:Last Year (Mar14) TTM:
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.
Net Income was 970 + 718 + 967 + 850 = $3,505 Mil.
Non Operating Income was -117 + 13 + -135 + 6 = $-233 Mil.
Cash Flow from Operations was 1009 + 1007 + 632 + 309 = $2,957 Mil.
Accounts Receivable was $7,371 Mil.
Revenue was 6803 + 7604 + 6042 + 6608 = $27,057 Mil.
Gross Profit was 2952 + 3177 + 2884 + 2700 = $11,713 Mil.
Total Current Assets was $13,994 Mil.
Total Assets was $68,199 Mil.
Property, Plant and Equipment(Net PPE) was $3,219 Mil.
Depreciation, Depletion and Amortization(DDA) was $725 Mil.
Selling, General & Admin. Expense(SGA) was $4,954 Mil.
Total Current Liabilities was $8,278 Mil.
Long-Term Debt was $20,226 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)
=(7645 / 27683) / (7371 / 27057)
=0.27616227 / 0.27242488
=1.0137

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)
=(3107 / 27057) / (3039 / 27683)
=0.43290091 / 0.41798216
=1.0357

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 - (12495 + 2580) / 62195) / (1 - (13994 + 3219) / 68199)
=0.75761717 / 0.74760627
=1.0134

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
=27683 / 27057
=1.0231

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))
=(725 / (725 + 3219)) / (720 / (720 + 2580))
=0.18382353 / 0.21818182
=0.8425

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)
=(5109 / 27683) / (4954 / 27057)
=0.1845537 / 0.18309495
=1.008

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)
=((21172 + 8891) / 62195) / ((20226 + 8278) / 68199)
=0.48336683 / 0.41795334
=1.1565

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
=(3505 - -233 - 2957) / 62195
=0.0126

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 -2.43 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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.15960.89021.13091.24241.18661.03071.00171.0761.07391.0221
GMI 0.98570.98491.05040.94010.99270.99551.00970.98131.02251.0377
AQI 1.00541.0130.97661.05980.89621.01490.99891.00521.02680.977
SGI 1.02051.04431.06390.57050.95751.05911.07760.99150.92111.0339
DEPI 0.99471.15631.49530.3130.96243.34531.03280.28063.58950.8662
SGAI 1.23250.80920.81731.21530.94780.95250.97540.99190.84591.0174
LVGI 0.92991.35751.01450.81081.26061.00691.10811.01320.9851.1554
TATA -0.0271-0.0285-0.0286-0.2077-0.0328-0.0057-0.0047-0.00440.0080.0043
M-score -2.46-2.74-2.34-3.67-2.63-2.15-2.45-2.53-2.09-2.47

Time Warner Inc Quarterly Data

Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15
DSRI 1.0761.14681.11361.13051.0451.10161.04551.04771.05041.0137
GMI 0.98130.95970.96980.96711.01351.04521.02831.06971.04691.0357
AQI 1.00520.99771.00311.02141.02680.990.97130.9780.9771.0134
SGI 0.99150.98020.98510.96510.94650.94310.95390.98861.00611.0231
DEPI 0.28060.27410.27251.48143.58953.71313.15051.89860.86620.8425
SGAI 0.99191.01310.9490.9190.88480.82360.86650.90090.97261.008
LVGI 1.01320.98690.97960.97240.9851.02511.12821.18281.15541.1565
TATA -0.0044-0.0068-0.01040.00430.0080.00150.01130.01460.00430.0126
M-score -2.53-2.50-2.52-2.30-2.11-2.08-2.19-2.29-2.45-2.43
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