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Walgreen Co (NYSE:WAG)
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.

Walgreen Co has a M-score of -2.44 suggests that the company is not a manipulator.

WAG' s 10-Year Beneish M-Score Range
Min: -3.04   Max: -1.43
Current: -2.45

-3.04
-1.43

During the past 13 years, the highest Beneish M-Score of Walgreen Co was -1.43. The lowest was -3.04. And the median was -2.43.


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 Walgreen Co 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 * 1.0669+0.528 * 1.0154+0.404 * 1.117+0.892 * 1.048+0.115 * 0.9647
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9713+4.679 * -0.0349-0.327 * 0.8845
=-2.44

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

This Year (Feb14) TTM:Last Year (Feb13) TTM:
Accounts Receivable was $2,774 Mil.
Revenue was 19605 + 18329 + 17941 + 18313 = $74,188 Mil.
Gross Profit was 5650 + 5152 + 5191 + 5222 = $21,215 Mil.
Total Current Assets was $12,036 Mil.
Total Assets was $37,081 Mil.
Property, Plant and Equipment(Net PPE) was $12,136 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,306 Mil.
Selling, General & Admin. Expense(SGA) was $17,596 Mil.
Total Current Liabilities was $8,499 Mil.
Long-Term Debt was $4,489 Mil.
Net Income was 754 + 695 + 657 + 624 = $2,730 Mil.
Non Operating Income was -59 + 225 + 43 + 77 = $286 Mil.
Cash Flow from Operations was 1104 + 133 + 1123 + 1379 = $3,739 Mil.
Accounts Receivable was $2,481 Mil.
Revenue was 18647 + 17316 + 17073 + 17752 = $70,788 Mil.
Gross Profit was 5607 + 5099 + 4835 + 5014 = $20,555 Mil.
Total Current Assets was $12,432 Mil.
Total Assets was $35,564 Mil.
Property, Plant and Equipment(Net PPE) was $12,048 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,246 Mil.
Selling, General & Admin. Expense(SGA) was $17,285 Mil.
Total Current Liabilities was $9,025 Mil.
Long-Term Debt was $5,058 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)
=(2774 / 74188) / (2481 / 70788)
=0.03739149 / 0.03504831
=1.0669

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)
=(5152 / 70788) / (5650 / 74188)
=0.29037407 / 0.28596269
=1.0154

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 - (12036 + 12136) / 37081) / (1 - (12432 + 12048) / 35564)
=0.34812977 / 0.31166348
=1.117

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
=74188 / 70788
=1.048

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))
=(1246 / (1246 + 12048)) / (1306 / (1306 + 12136))
=0.09372649 / 0.09715816
=0.9647

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)
=(17596 / 74188) / (17285 / 70788)
=0.23718122 / 0.2441798
=0.9713

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)
=((4489 + 8499) / 37081) / ((5058 + 9025) / 35564)
=0.35026024 / 0.39599033
=0.8845

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
=(2730 - 286 - 3739) / 37081
=-0.0349

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.

Walgreen Co has a M-score of -2.44 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.

Walgreen Co Annual Data

Aug04Aug05Aug06Aug07Aug08Aug09Aug10Aug11Aug12Aug13
DSRI 0.99541.06151.3150.95611.0290.92070.92210.95190.87451.2048
GMI 0.99570.97341.00560.97961.00581.01380.9880.99150.99970.9711
AQI 1.06410.88553.1942.98251.18370.92741.32361.0892.42631.0143
SGI 1.15391.12511.12341.1341.09811.07291.06451.07070.99241.0082
DEPI 0.95010.95010.95330.99910.96230.95580.98170.97930.97510.9237
SGAI 1.00621.03310.9951.01880.99421.01431.01470.99681.0271.031
LVGI 0.97041.00361.09531.03941.01991.01691.03221.02111.00180.9847
TATA -0.02330.0107-0.0433-0.0183-0.0394-0.0837-0.0629-0.0338-0.0689-0.0556
M-score -2.43-2.33-1.43-1.71-2.48-2.91-2.68-2.60-2.36-2.56

Walgreen Co Quarterly Data

Nov11Feb12May12Aug12Nov12Feb13May13Aug13Nov13Feb14
DSRI 0.98020.96040.86550.87450.90281.02181.07151.20481.16441.0669
GMI 1.00171.00051.00240.99970.98480.97530.97490.97110.99361.0154
AQI 1.12191.17211.2122.42632.35912.23822.2131.01431.09151.117
SGI 1.06721.04621.02030.99240.96980.96780.98381.00821.03441.048
DEPI 1.00240.99150.98310.97510.94390.92950.93070.92370.94680.9647
SGAI 0.99531.00591.011.0271.05031.05511.05511.0310.99230.9713
LVGI 0.99350.98020.96391.00181.05411.09411.08910.98470.89480.8845
TATA -0.0218-0.0291-0.0536-0.0689-0.0634-0.0662-0.0524-0.0556-0.0396-0.0349
M-score -2.49-2.54-2.74-2.36-2.38-2.36-2.24-2.56-2.42-2.44
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