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Wendy's Co (NAS:WEN)
Beneish M-Score
-2.69 (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 -2.69 suggests that the company is not a manipulator.

WEN' s Beneish M-Score Range Over the Past 10 Years
Min: -5.71   Max: 6.19
Current: -2.69

-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 -2.53.


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 * 1.1996+0.528 * 0.8617+0.404 * 1.0175+0.892 * 0.9301+0.115 * 1.0981
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9506+4.679 * -0.021-0.327 * 1.5729
=-2.69

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

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $77 Mil.
Revenue was 464.629 + 489.534 + 466.246 + 549.864 = $1,970 Mil.
Gross Profit was 173.105 + 174.412 + 162.974 + 180.219 = $691 Mil.
Total Current Assets was $595 Mil.
Total Assets was $4,081 Mil.
Property, Plant and Equipment(Net PPE) was $1,226 Mil.
Depreciation, Depletion and Amortization(DDA) was $160 Mil.
Selling, General & Admin. Expense(SGA) was $247 Mil.
Total Current Liabilities was $305 Mil.
Long-Term Debt was $2,380 Mil.
Net Income was 7.584 + 40.195 + 27.507 + 23.294 = $99 Mil.
Non Operating Income was 0.214 + -7.023 + 0.239 + 0.205 = $-6 Mil.
Cash Flow from Operations was 65.515 + 31.374 + 21.74 + 72.18 = $191 Mil.
Accounts Receivable was $69 Mil.
Revenue was 496.67 + 506.079 + 523.196 + 592.405 = $2,118 Mil.
Gross Profit was 164.025 + 170.938 + 149.006 + 155.968 = $640 Mil.
Total Current Assets was $670 Mil.
Total Assets was $4,179 Mil.
Property, Plant and Equipment(Net PPE) was $1,235 Mil.
Depreciation, Depletion and Amortization(DDA) was $180 Mil.
Selling, General & Admin. Expense(SGA) was $279 Mil.
Total Current Liabilities was $339 Mil.
Long-Term Debt was $1,409 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)
=(77.078 / 1970.273) / (69.084 / 2118.35)
=0.03912047 / 0.03261217
=1.1996

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)
=(174.412 / 2118.35) / (173.105 / 1970.273)
=0.30209219 / 0.35056563
=0.8617

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 - (595.042 + 1226.383) / 4080.782) / (1 - (670.233 + 1234.992) / 4179.455)
=0.55365785 / 0.54414511
=1.0175

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
=1970.273 / 2118.35
=0.9301

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))
=(179.56 / (179.56 + 1234.992)) / (160.303 / (160.303 + 1226.383))
=0.12693772 / 0.11560151
=1.0981

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)
=(246.806 / 1970.273) / (279.141 / 2118.35)
=0.12526487 / 0.13177284
=0.9506

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)
=((2379.934 + 304.907) / 4080.782) / ((1409.066 + 339.144) / 4179.455)
=0.65792316 / 0.41828659
=1.5729

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
=(98.58 - -6.365 - 190.809) / 4080.782
=-0.021

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 -2.69 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

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.52540.62552.46470.70480.91720.64291.05871.06211.3463
GMI 1.38651.03621.21870.87110.9851.02891.01590.95660.8128
AQI 1.7241.22931.0020.92731.02981.07380.98890.95771.0697
SGI 1.70941.01641.44241.3370.97471.02351.03040.99290.8286
DEPI 0.67440.95212.44220.45191.00040.96740.98970.74881.3124
SGAI 0.55330.8570.83961.0620.9050.9170.95531.02811.0814
LVGI 0.74511.05690.53971.1651.05110.94241.02291.01091.0285
TATA -0.4366-0.0603-0.0975-0.0569-0.0448-0.0554-0.0339-0.0636-0.0326
M-score -3.71-2.98-0.73-2.94-2.78-2.97-2.55-2.80-2.52

Wendy's Co Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.94831.06211.06941.21971.31491.33671.44121.10581.1996
GMI 0.95470.95660.92060.89220.86180.81380.80870.84070.8617
AQI 0.97970.95771.01081.03041.01911.06971.00970.81471.0175
SGI 1.01390.99290.95670.89770.8390.83450.83880.8850.9301
DEPI 0.76940.74880.8670.90721.06641.31241.33081.24641.0981
SGAI 1.06961.02811.11231.14651.16091.07681.01310.96580.9506
LVGI 1.00111.01091.03631.02671.01241.02851.00041.25461.5729
TATA -0.0615-0.0636-0.0525-0.043-0.0345-0.0326-0.0389-0.0209-0.021
M-score -2.87-2.80-2.78-2.66-2.58-2.53-2.46-2.79-2.69
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