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Wendy's Co (NAS:WEN)
Beneish M-Score
-2.60 (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 -2.52 suggests that the company is not a manipulator.

WEN' s 10-Year Beneish M-Score Range
Min: -5.71   Max: 6.19
Current: -2.6

-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 -2.50.


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 * 1.3463+0.528 * 0.8128+0.404 * 1.0697+0.892 * 0.8286+0.115 * 1.3124
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0814+4.679 * -0.0326-0.327 * 1.0285
=-2.52

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $69 Mil.
Revenue was 501.951 + 512.489 + 523.427 + 523.196 = $2,061 Mil.
Gross Profit was 166.932 + 168.682 + 175.647 + 149.006 = $660 Mil.
Total Current Assets was $562 Mil.
Total Assets was $4,146 Mil.
Property, Plant and Equipment(Net PPE) was $1,271 Mil.
Depreciation, Depletion and Amortization(DDA) was $160 Mil.
Selling, General & Admin. Expense(SGA) was $263 Mil.
Total Current Liabilities was $340 Mil.
Long-Term Debt was $1,394 Mil.
Net Income was 23.294 + 22.83 + 29.007 + 46.303 = $121 Mil.
Non Operating Income was 0.2 + 0.373 + 0.857 + 0.523 = $2 Mil.
Cash Flow from Operations was 72.18 + 101.587 + 66.268 + 14.741 = $255 Mil.
Accounts Receivable was $62 Mil.
Revenue was 592.405 + 640.779 + 650.544 + 603.682 = $2,487 Mil.
Gross Profit was 155.968 + 171.602 + 177.246 + 142.854 = $648 Mil.
Total Current Assets was $922 Mil.
Total Assets was $4,363 Mil.
Property, Plant and Equipment(Net PPE) was $1,165 Mil.
Depreciation, Depletion and Amortization(DDA) was $200 Mil.
Selling, General & Admin. Expense(SGA) was $294 Mil.
Total Current Liabilities was $350 Mil.
Long-Term Debt was $1,425 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)
=(69.187 / 2061.063) / (62.021 / 2487.41)
=0.0335686 / 0.02493397
=1.3463

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)
=(168.682 / 2487.41) / (166.932 / 2061.063)
=0.26037927 / 0.32035265
=0.8128

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 - (562.102 + 1271.238) / 4145.842) / (1 - (922.411 + 1165.487) / 4363.04)
=0.55778826 / 0.52145797
=1.0697

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
=2061.063 / 2487.41
=0.8286

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))
=(200.219 / (200.219 + 1165.487)) / (159.86 / (159.86 + 1271.238))
=0.14660476 / 0.11170444
=1.3124

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)
=(263.257 / 2061.063) / (293.792 / 2487.41)
=0.12772875 / 0.11811161
=1.0814

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)
=((1394.366 + 340.224) / 4145.842) / ((1425.285 + 349.526) / 4363.04)
=0.41839269 / 0.40678311
=1.0285

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
=(121.434 - 1.953 - 254.776) / 4145.842
=-0.0326

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 -2.52 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

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 0.87491.05870.83180.88220.94831.06211.06941.21041.29471.3463
GMI 1.01511.01590.99780.97610.95470.95660.92060.89260.86260.8128
AQI 0.98030.98890.98980.97320.97970.95771.01081.03041.01911.0697
SGI 1.03811.03041.03021.02231.01390.99290.95670.90450.85210.8286
DEPI 1.15610.98970.82320.78910.76940.74880.8670.90721.06641.3124
SGAI 0.77860.95530.94610.97921.06961.02811.11231.13991.14771.0814
LVGI 1.0381.02291.02921.01271.00111.01091.03631.02671.01241.0285
TATA -0.037-0.0649-0.0719-0.0739-0.0923-0.0636-0.0525-0.043-0.0345-0.0326
M-score -2.69-2.70-2.97-2.96-3.02-2.80-2.78-2.66-2.59-2.52
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