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Time Warner Inc (NYSE:TWX)
Beneish M-Score
-2.45 (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 -2.45 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: -2.45

-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 -2.53.


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 * 1.004+0.528 * 0.9744+0.404 * 1.0161+0.892 * 1.041+0.115 * 1.0428
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9675+4.679 * -0.0005-0.327 * 1.0408
=-2.45

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
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.
Net Income was 1035 + 971 + 970 + 718 = $3,694 Mil.
Non Operating Income was -54 + -125 + -117 + 13 = $-283 Mil.
Cash Flow from Operations was 1201 + 791 + 1009 + 1007 = $4,008 Mil.
Accounts Receivable was $7,005 Mil.
Revenue was 6243 + 6788 + 6803 + 7604 = $27,438 Mil.
Gross Profit was 2562 + 2863 + 2952 + 3177 = $11,554 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 $751 Mil.
Selling, General & Admin. Expense(SGA) was $5,021 Mil.
Total Current Liabilities was $8,724 Mil.
Long-Term Debt was $21,389 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)
=(7322 / 28564) / (7005 / 27438)
=0.25633665 / 0.25530286
=1.004

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)
=(3160 / 27438) / (3038 / 28564)
=0.42109483 / 0.43215236
=0.9744

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 - (12139 + 2569) / 62674) / (1 - (12893 + 2678) / 63095)
=0.76532533 / 0.75321341
=1.0161

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
=28564 / 27438
=1.041

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))
=(751 / (751 + 2678)) / (683 / (683 + 2569))
=0.21901429 / 0.2100246
=1.0428

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)
=(5057 / 28564) / (5021 / 27438)
=0.17704103 / 0.18299439
=0.9675

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)
=((22728 + 8403) / 62674) / ((21389 + 8724) / 63095)
=0.49671315 / 0.47726444
=1.0408

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
=(3694 - -283 - 4008) / 62674
=-0.0005

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 -2.45 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 0.89021.13091.24241.18661.03071.00171.22060.94671.02210.9341
GMI 0.98491.05040.94010.99270.99551.00971.02960.97451.03770.9865
AQI 1.0130.97661.05980.89621.01490.99891.00521.02680.9771.0182
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 1.35751.01450.81081.26061.00691.10811.01320.9851.15541.0237
TATA -0.0285-0.0286-0.2077-0.0328-0.0057-0.00460.00220.0080.00430.0039
M-score -2.74-2.34-3.67-2.63-2.15-2.54-1.98-2.46-2.47-2.48

Time Warner Inc Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 1.28850.92120.97090.92080.91921.05041.01371.10051.0040.9341
GMI 1.01450.96590.99910.9811.01981.04691.03571.03760.97440.9865
AQI 1.02141.02680.990.97130.9780.9771.01341.00521.01611.0182
SGI 0.84671.07381.07011.0831.12691.00611.02311.03691.0411.0277
DEPI 0.16690.86720.91990.733221.14150.86620.84251.01531.04281.0411
SGAI 0.7651.02630.9531.02271.08230.97261.0081.0010.96750.9044
LVGI 0.97240.9851.02511.12821.18281.15541.15651.08121.04081.0237
TATA 0.01110.0080.00150.01110.01460.00430.01260.0089-0.00050.0039
M-score -2.33-2.47-2.45-2.53-0.13-2.45-2.43-2.32-2.45-2.48
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