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The Wendy's Co (NAS:WEN)
Beneish M-Score
-2.76 (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.

The Wendy's Co has a M-score of -2.76 suggests that the company is not a manipulator.

WEN' s Beneish M-Score Range Over the Past 10 Years
Min: -5.73   Max: 6.2
Current: -2.76

-5.73
6.2

During the past 13 years, the highest Beneish M-Score of The Wendy's Co was 6.20. The lowest was -5.73. And the median was -2.58.


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 The 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 * 1.2446+0.528 * 0.8485+0.404 * 0.996+0.892 * 0.9256+0.115 * 0.9871
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1264+4.679 * -0.0301-0.327 * 1.5796
=-2.76

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

This Year (Mar16) TTM:Last Year (Mar15) TTM:
Accounts Receivable was $88 Mil.
Revenue was 378.787 + 464.365 + 464.629 + 489.534 = $1,797 Mil.
Gross Profit was 164.051 + 192.049 + 173.105 + 174.412 = $704 Mil.
Total Current Assets was $607 Mil.
Total Assets was $4,150 Mil.
Property, Plant and Equipment(Net PPE) was $1,236 Mil.
Depreciation, Depletion and Amortization(DDA) was $150 Mil.
Selling, General & Admin. Expense(SGA) was $262 Mil.
Total Current Liabilities was $257 Mil.
Long-Term Debt was $2,479 Mil.
Net Income was 25.363 + 85.856 + 7.584 + 40.195 = $159 Mil.
Non Operating Income was 0.262 + 52.295 + 0.214 + -7.023 = $46 Mil.
Cash Flow from Operations was 47.274 + 93.851 + 65.515 + 31.374 = $238 Mil.
Accounts Receivable was $76 Mil.
Revenue was 451.769 + 487.303 + 496.67 + 506.079 = $1,942 Mil.
Gross Profit was 146.658 + 163.368 + 164.025 + 170.938 = $645 Mil.
Total Current Assets was $538 Mil.
Total Assets was $4,134 Mil.
Property, Plant and Equipment(Net PPE) was $1,288 Mil.
Depreciation, Depletion and Amortization(DDA) was $154 Mil.
Selling, General & Admin. Expense(SGA) was $251 Mil.
Total Current Liabilities was $333 Mil.
Long-Term Debt was $1,392 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)
=(87.999 / 1797.315) / (76.387 / 1941.821)
=0.04896137 / 0.03933782
=1.2446

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)
=(644.989 / 1941.821) / (703.617 / 1797.315)
=0.33215677 / 0.39148229
=0.8485

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 - (607.355 + 1235.596) / 4150.31) / (1 - (538.422 + 1288.009) / 4133.835)
=0.55594859 / 0.55817516
=0.996

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
=1797.315 / 1941.821
=0.9256

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))
=(154.244 / (154.244 + 1288.009)) / (150.142 / (150.142 + 1235.596))
=0.10694656 / 0.10834804
=0.9871

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)
=(261.501 / 1797.315) / (250.819 / 1941.821)
=0.14549536 / 0.1291669
=1.1264

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)
=((2478.581 + 256.995) / 4150.31) / ((1392.309 + 332.604) / 4133.835)
=0.6591257 / 0.41726702
=1.5796

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
=(158.998 - 45.748 - 238.014) / 4150.31
=-0.0301

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.

The Wendy's Co has a M-score of -2.76 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.

The Wendy's Co Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.52540.62552.46470.47970.9370.92461.05871.06211.24651.7632
GMI 1.13271.0311.49950.93861.00940.93191.01590.95660.81280.8731
AQI 1.7241.22931.0020.92731.02981.07380.98890.95771.08190.9768
SGI 1.70941.01641.44241.96450.95410.71171.03040.99290.82860.9074
DEPI 0.60720.94492.73340.45191.00040.96740.98970.74881.28491.0255
SGAI 0.73930.8890.60580.92650.96451.14040.82611.02811.08141.0739
LVGI 0.74511.05690.53971.1651.05110.94241.02291.01091.0251.5595
TATA -0.441-0.0377-0.0972-0.058-0.0535-0.0556-0.0339-0.0636-0.0327-0.0236
M-score -3.90-2.88-0.51-2.54-2.82-3.08-2.53-2.80-2.61-2.24

The Wendy's Co Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 1.09011.09851.25511.35571.24341.45871.11761.21081.72231.2446
GMI 0.93920.9030.87370.84230.82480.83370.86770.88990.87640.8485
AQI 0.95771.01081.03041.01911.08191.00970.81471.01750.97680.996
SGI 0.96740.93140.87240.81370.83070.82870.87560.92150.9290.9256
DEPI 0.74880.8670.90721.06641.28491.33081.24641.09811.02550.9871
SGAI 1.04711.1341.17061.18721.07971.02040.97130.9551.05611.1264
LVGI 1.01091.03631.02671.01241.0251.00041.25461.57291.55951.5796
TATA -0.0635-0.0525-0.043-0.0345-0.0327-0.0389-0.0209-0.021-0.0236-0.0301
M-score -2.81-2.79-2.66-2.58-2.61-2.44-2.78-2.67-2.25-2.76
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