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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.
During the past 13 years, the highest Beneish M-Score of Wisconsin Energy Corp was 0.00. The lowest was 0.00. And the median was 0.00.
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 Wisconsin Energy Corp 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 *||+||0.528 *||+||0.404 *||+||0.892 *||+||0.115 *|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 *||+||4.679 *||-||0.327 *|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $352 Mil.|
Revenue was 1225.1 + 1033.3 + 1043.7 + 1695 = $4,997 Mil.
Gross Profit was 701.6 + 625.9 + 625.3 + 784.9 = $2,738 Mil.
Total Current Assets was $1,535 Mil.
Total Assets was $15,163 Mil.
Property, Plant and Equipment(Net PPE) was $11,258 Mil.
Depreciation, Depletion and Amortization(DDA) was $419 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $1,669 Mil.
Long-Term Debt was $4,186 Mil.
Net Income was 121.4 + 126.3 + 133 + 207.6 = $588 Mil.
Non Operating Income was 14.5 + 20.9 + 25.6 + 18.4 = $79 Mil.
Cash Flow from Operations was 163.1 + 313.3 + 336.2 + 385.1 = $1,198 Mil.
|Accounts Receivable was $406 Mil.
Revenue was 1178.3 + 1053.2 + 1012.3 + 1275.2 = $4,519 Mil.
Gross Profit was 684.3 + 652.5 + 621 + 734.1 = $2,692 Mil.
Total Current Assets was $1,551 Mil.
Total Assets was $14,769 Mil.
Property, Plant and Equipment(Net PPE) was $10,907 Mil.
Depreciation, Depletion and Amortization(DDA) was $400 Mil.
Selling, General & Admin. Expense(SGA) was $0 Mil.
Total Current Liabilities was $1,496 Mil.
Long-Term Debt was $4,363 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(352.1 / 4997.1)||/||(406 / 4519)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(625.9 / 4519)||/||(701.6 / 4997.1)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (1535.4 + 11257.7) / 15163.4)||/||(1 - (1551.1 + 10906.6) / 14769.4)|
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.
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))|
|=||(400.2 / (400.2 + 10906.6))||/||(419.4 / (419.4 + 11257.7))|
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)|
|=||(0 / 4997.1)||/||(0 / 4519)|
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)|
|=||((4186.4 + 1668.7) / 15163.4)||/||((4363.2 + 1496.4) / 14769.4)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(588.3 - 79.4||-||1197.7)||/||15163.4|
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.
Wisconsin Energy Corp has a M-score of signals that the company is likely to be a manipulator.
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
Wisconsin Energy Corp Annual Data
Wisconsin Energy Corp Quarterly Data