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Walgreen Co (NYSE:WAG)
Beneish M-Score
-2.59 (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 -2.59 suggests that the company is not a manipulator.

WAG' s 10-Year Beneish M-Score Range
Min: -3.04   Max: -1.43
Current: -2.59

-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 * 1.2383+0.528 * 1.0335+0.404 * 0.8001+0.892 * 1.0599+0.115 * 0.9812
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9728+4.679 * -0.046-0.327 * 1.3313
=-2.59

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

This Year (Nov14) TTM:Last Year (Nov13) TTM:
Accounts Receivable was $3,579 Mil.
Revenue was 19554 + 19057 + 19401 + 19605 = $77,617 Mil.
Gross Profit was 5296 + 5327 + 5440 + 5650 = $21,713 Mil.
Total Current Assets was $23,280 Mil.
Total Assets was $48,612 Mil.
Property, Plant and Equipment(Net PPE) was $12,103 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,303 Mil.
Selling, General & Admin. Expense(SGA) was $18,069 Mil.
Total Current Liabilities was $9,877 Mil.
Long-Term Debt was $13,756 Mil.
Net Income was 809 + -239 + 722 + 754 = $2,046 Mil.
Non Operating Income was 199 + -771 + 124 + -59 = $-507 Mil.
Cash Flow from Operations was 1031 + 1384 + 1272 + 1104 = $4,791 Mil.
Accounts Receivable was $2,727 Mil.
Revenue was 18329 + 17941 + 18313 + 18647 = $73,230 Mil.
Gross Profit was 5152 + 5191 + 5222 + 5607 = $21,172 Mil.
Total Current Assets was $11,722 Mil.
Total Assets was $36,481 Mil.
Property, Plant and Equipment(Net PPE) was $12,351 Mil.
Depreciation, Depletion and Amortization(DDA) was $1,302 Mil.
Selling, General & Admin. Expense(SGA) was $17,524 Mil.
Total Current Liabilities was $8,821 Mil.
Long-Term Debt was $4,501 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)
=(3579 / 77617) / (2727 / 73230)
=0.04611103 / 0.03723884
=1.2383

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)
=(5327 / 73230) / (5296 / 77617)
=0.28911648 / 0.27974542
=1.0335

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 - (23280 + 12103) / 48612) / (1 - (11722 + 12351) / 36481)
=0.27213445 / 0.34012226
=0.8001

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
=77617 / 73230
=1.0599

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))
=(1302 / (1302 + 12351)) / (1303 / (1303 + 12103))
=0.09536366 / 0.09719529
=0.9812

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)
=(18069 / 77617) / (17524 / 73230)
=0.23279694 / 0.23930083
=0.9728

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)
=((13756 + 9877) / 48612) / ((4501 + 8821) / 36481)
=0.48615568 / 0.36517639
=1.3313

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
=(2046 - -507 - 4791) / 48612
=-0.046

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 -2.59 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

Aug05Aug06Aug07Aug08Aug09Aug10Aug11Aug12Aug13Aug14
DSRI 1.06151.3150.95611.0290.92070.92210.95190.87451.20481.1558
GMI 0.97341.00560.97961.00581.01380.9880.99150.99970.97111.0357
AQI 0.88553.1942.98251.18370.92741.32361.0892.42631.01431.0553
SGI 1.12511.12341.1341.09811.07291.06451.07070.99241.00821.0578
DEPI 0.95010.95330.99910.96230.95580.98170.97930.97510.92370.986
SGAI 1.03310.9951.01880.99421.01431.01470.99681.0271.0310.9695
LVGI 1.00361.09531.03941.01991.01691.03221.02111.00180.98470.9022
TATA 0.0107-0.0433-0.0183-0.0394-0.0837-0.0629-0.0338-0.0689-0.0556-0.0398
M-score -2.33-1.43-1.71-2.48-2.91-2.68-2.60-2.36-2.56-2.39

Walgreen Co Quarterly Data

Aug12Nov12Feb13May13Aug13Nov13Feb14May14Aug14Nov14
DSRI 0.87450.90281.02181.07151.20481.16441.06691.18731.15581.2383
GMI 0.99970.98480.97530.97490.97110.99361.01541.02211.03571.0335
AQI 2.42632.35912.23822.2131.01431.09151.1171.14521.05530.8001
SGI 0.99240.96980.96780.98381.00821.03441.0481.0551.05781.0599
DEPI 0.97510.94390.92950.93070.92370.94680.96470.96130.9860.9812
SGAI 1.0271.05031.05511.05511.0310.99230.97130.96290.96950.9728
LVGI 1.00181.05411.09411.08910.98470.89480.88450.82110.90221.3313
TATA -0.0689-0.0634-0.0662-0.0524-0.0556-0.0396-0.0349-0.0304-0.0398-0.046
M-score -2.36-2.38-2.36-2.24-2.56-2.42-2.44-2.27-2.39-2.59
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