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Wendy's Co (NAS:WEN)
Beneish M-Score
-2.79 (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.

Wendy's Co has a M-score of -2.79 suggests that the company is not a manipulator.

WEN' s 10-Year Beneish M-Score Range
Min: -5.71   Max: 6.19
Current: -2.79

-5.71
6.19

During the past 13 years, the highest Beneish M-Score of Wendy's Co was 6.19. The lowest was -5.71. 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 Wendy's 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 * 1.1238+0.528 * 0.8379+0.404 * 0.8147+0.892 * 0.8708+0.115 * 1.2464
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9764+4.679 * -0.0209-0.327 * 1.2546
=-2.79

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

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $71 Mil.
Revenue was 489.534 + 466.246 + 501.951 + 512.489 = $1,970 Mil.
Gross Profit was 174.412 + 162.974 + 166.932 + 168.682 = $673 Mil.
Total Current Assets was $1,554 Mil.
Total Assets was $5,107 Mil.
Property, Plant and Equipment(Net PPE) was $1,254 Mil.
Depreciation, Depletion and Amortization(DDA) was $157 Mil.
Selling, General & Admin. Expense(SGA) was $247 Mil.
Total Current Liabilities was $298 Mil.
Long-Term Debt was $2,380 Mil.
Net Income was 40.195 + 27.507 + 23.294 + 22.83 = $114 Mil.
Non Operating Income was -7.023 + 0.239 + 0.2 + 0.373 = $-6 Mil.
Cash Flow from Operations was 31.374 + 21.74 + 72.18 + 101.587 = $227 Mil.
Accounts Receivable was $72 Mil.
Revenue was 506.079 + 523.196 + 592.405 + 640.779 = $2,262 Mil.
Gross Profit was 170.938 + 149.006 + 155.968 + 171.602 = $648 Mil.
Total Current Assets was $673 Mil.
Total Assets was $4,157 Mil.
Property, Plant and Equipment(Net PPE) was $1,188 Mil.
Depreciation, Depletion and Amortization(DDA) was $191 Mil.
Selling, General & Admin. Expense(SGA) was $290 Mil.
Total Current Liabilities was $321 Mil.
Long-Term Debt was $1,416 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)
=(70.515 / 1970.22) / (72.055 / 2262.459)
=0.03579042 / 0.03184809
=1.1238

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)
=(162.974 / 2262.459) / (174.412 / 1970.22)
=0.28619922 / 0.34158622
=0.8379

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 - (1553.919 + 1254.489) / 5106.545) / (1 - (672.934 + 1187.648) / 4157.055)
=0.45003755 / 0.55242786
=0.8147

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
=1970.22 / 2262.459
=0.8708

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))
=(190.74 / (190.74 + 1187.648)) / (156.668 / (156.668 + 1254.489))
=0.13837903 / 0.11102096
=1.2464

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)
=(246.992 / 1970.22) / (290.486 / 2262.459)
=0.12536265 / 0.12839393
=0.9764

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)
=((2379.782 + 297.9) / 5106.545) / ((1416.411 + 321.01) / 4157.055)
=0.52436275 / 0.41794516
=1.2546

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
=(113.826 - -6.211 - 226.881) / 5106.545
=-0.0209

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.

Wendy's Co has a M-score of -2.79 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.

Wendy's Co Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.33650.52540.62552.46470.47971.34760.64291.05871.06211.3463
GMI 1.23061.38651.03621.21870.93860.91421.02891.01590.95660.8128
AQI 0.91831.7241.22931.0020.92731.02981.07380.98890.95771.0697
SGI 2.21361.70941.01641.44241.96450.66341.02351.03040.99290.8286
DEPI 2.43360.67440.95212.44220.45191.00040.96740.98970.74881.3124
SGAI 0.83310.55330.8570.83960.92651.03730.9170.95531.02811.0814
LVGI 1.31190.74511.05690.53971.1651.05110.94241.02291.01091.0285
TATA 0.1824-0.4366-0.0603-0.0975-0.0572-0.0448-0.0556-0.0649-0.0636-0.0326
M-score -0.97-3.71-2.98-0.73-2.53-2.73-2.97-2.70-2.80-2.52

Wendy's Co Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 0.83180.88220.94831.06211.06941.21971.30521.35771.46441.1238
GMI 0.99780.97610.95470.95660.92060.89220.86190.81170.80610.8379
AQI 0.98980.97320.97970.95771.01081.03041.01911.06971.00970.8147
SGI 1.03021.02231.01390.99290.95670.89770.84530.82160.82540.8708
DEPI 0.82320.78910.76940.74880.8670.90721.06641.31241.33081.2464
SGAI 0.94610.97921.06961.02811.11231.14651.15471.08831.02420.9764
LVGI 1.02921.01271.00111.01091.03631.02671.01241.02851.00041.2546
TATA -0.0719-0.0739-0.0923-0.0636-0.0525-0.043-0.0345-0.0326-0.0389-0.0209
M-score -2.97-2.96-3.02-2.80-2.78-2.66-2.59-2.52-2.46-2.79
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