Switch to:
The Wendy's Co (NAS:WEN)
Beneish M-Score
-2.27 (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 -2.27 suggests that the company is not a manipulator.

WEN' s Beneish M-Score Range Over the Past 10 Years
Min: -3.73   Max: 3.39
Current: -2.27

-3.73
3.39

During the past 13 years, the highest Beneish M-Score of The Wendy's Co was 3.39. The lowest was -3.73. And the median was -2.55.


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 * 1.7091+0.528 * 0.8626+0.404 * 0.9768+0.892 * 0.9362+0.115 * 1.0255
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0505+4.679 * -0.0236-0.327 * 1.5595
=-2.27

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $102 Mil.
Revenue was 464.365 + 464.629 + 489.534 + 466.246 = $1,885 Mil.
Gross Profit was 192.049 + 173.105 + 174.412 + 162.974 = $703 Mil.
Total Current Assets was $617 Mil.
Total Assets was $4,109 Mil.
Property, Plant and Equipment(Net PPE) was $1,228 Mil.
Depreciation, Depletion and Amortization(DDA) was $154 Mil.
Selling, General & Admin. Expense(SGA) was $257 Mil.
Total Current Liabilities was $269 Mil.
Long-Term Debt was $2,403 Mil.
Net Income was 85.856 + 7.584 + 40.195 + 27.507 = $161 Mil.
Non Operating Income was 52.295 + 0.214 + -7.023 + 0.239 = $46 Mil.
Cash Flow from Operations was 93.851 + 65.515 + 31.374 + 21.74 = $212 Mil.
Accounts Receivable was $64 Mil.
Revenue was 487.303 + 496.67 + 506.079 + 523.196 = $2,013 Mil.
Gross Profit was 163.368 + 164.025 + 170.938 + 149.006 = $647 Mil.
Total Current Assets was $562 Mil.
Total Assets was $4,138 Mil.
Property, Plant and Equipment(Net PPE) was $1,241 Mil.
Depreciation, Depletion and Amortization(DDA) was $160 Mil.
Selling, General & Admin. Expense(SGA) was $261 Mil.
Total Current Liabilities was $340 Mil.
Long-Term Debt was $1,385 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)
=(102.498 / 1884.774) / (64.06 / 2013.248)
=0.05438212 / 0.03181923
=1.7091

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)
=(173.105 / 2013.248) / (192.049 / 1884.774)
=0.32153863 / 0.37274496
=0.8626

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 - (616.569 + 1227.944) / 4108.72) / (1 - (562.102 + 1241.17) / 4137.599)
=0.55107357 / 0.5641743
=0.9768

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
=1884.774 / 2013.248
=0.9362

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))
=(159.86 / (159.86 + 1241.17)) / (153.732 / (153.732 + 1227.944))
=0.11410177 / 0.11126487
=1.0255

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)
=(257.167 / 1884.774) / (261.487 / 2013.248)
=0.13644448 / 0.12988315
=1.0505

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)
=((2402.823 + 268.774) / 4108.72) / ((1384.972 + 340.224) / 4137.599)
=0.6502261 / 0.41695582
=1.5595

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
=(161.142 - 45.725 - 212.48) / 4108.72
=-0.0236

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 -2.27 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 0.52540.62552.46470.70480.91720.64291.05871.09011.25261.7097
GMI 1.38651.03621.21870.87110.9851.02891.01590.93920.82370.8775
AQI 1.7241.22931.0020.92731.02981.07380.98890.95771.08190.9768
SGI 1.70941.01641.44241.3370.97471.02351.03040.96740.82460.9358
DEPI 0.67440.95212.44220.45191.00040.96740.98970.74881.28491.0255
SGAI 0.55330.8570.83961.0620.9050.9170.95531.04711.08461.0514
LVGI 0.74511.05690.53971.1651.05110.94241.02291.01091.0251.5595
TATA -0.4407-0.0377-0.0975-0.0569-0.0448-0.0556-0.0339-0.0635-0.0327-0.0236
M-score -3.73-2.87-0.73-2.94-2.78-2.97-2.55-2.81-2.61-2.26

The Wendy's Co Quarterly Data

Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15
DSRI 0.94831.09011.09851.25511.35571.24341.44791.10931.20161.7091
GMI 0.95470.93920.9030.87370.84230.82480.81920.85280.8750.8626
AQI 0.97970.95771.01081.03041.01911.08191.00970.81471.01750.9768
SGI 1.01390.96740.93140.87240.81370.83070.83490.88220.92850.9362
DEPI 0.76940.74880.8670.90721.06641.28491.33081.24641.09811.0255
SGAI 1.06961.04711.1341.17061.18721.07971.01540.96650.95021.0505
LVGI 1.00111.01091.03631.02671.01241.0251.00041.25461.57291.5595
TATA -0.0615-0.0635-0.0525-0.043-0.0345-0.0327-0.0389-0.0209-0.021-0.0236
M-score -2.87-2.81-2.79-2.66-2.58-2.61-2.45-2.78-2.68-2.27
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)

GuruFocus Premium Plus Membership

FEEDBACK