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Wendy's Co (NAS:WEN)
Beneish M-Score
-2.67 (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 -2.67 suggests that the company is not a manipulator.

WEN' s 10-Year Beneish M-Score Range
Min: -6.18   Max: 6.96
Current: -2.67

-6.18
6.96

During the past 13 years, the highest Beneish M-Score of Wendy's Co was 6.96. The lowest was -6.18. 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 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 * 1.2104+0.528 * 0.8926+0.404 * 1.0304+0.892 * 0.9045+0.115 * 0.9072
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.1399+4.679 * -0.0451-0.327 * 1.0267
=-2.67

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $72 Mil.
Revenue was 523.427 + 523.196 + 592.405 + 640.779 = $2,280 Mil.
Gross Profit was 175.647 + 149.006 + 155.968 + 171.602 = $652 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 $291 Mil.
Total Current Liabilities was $321 Mil.
Long-Term Debt was $1,416 Mil.
Net Income was 29.007 + 46.303 + 33.069 + -1.939 = $106 Mil.
Non Operating Income was 0.857 + 0.523 + 22.791 + 2.273 = $26 Mil.
Cash Flow from Operations was 66.268 + 14.741 + 77.156 + 109.327 = $267 Mil.
Accounts Receivable was $66 Mil.
Revenue was 650.544 + 603.682 + 629.879 + 636.308 = $2,520 Mil.
Gross Profit was 177.246 + 142.854 + 165.603 + 157.883 = $644 Mil.
Total Current Assets was $776 Mil.
Total Assets was $4,317 Mil.
Property, Plant and Equipment(Net PPE) was $1,227 Mil.
Depreciation, Depletion and Amortization(DDA) was $176 Mil.
Selling, General & Admin. Expense(SGA) was $282 Mil.
Total Current Liabilities was $535 Mil.
Long-Term Debt was $1,222 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)
=(72.055 / 2279.807) / (65.81 / 2520.413)
=0.03160575 / 0.0261108
=1.2104

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)
=(149.006 / 2520.413) / (175.647 / 2279.807)
=0.25534942 / 0.28608694
=0.8926

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 - (672.934 + 1187.648) / 4157.055) / (1 - (775.795 + 1226.532) / 4316.695)
=0.55242786 / 0.53614351
=1.0304

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
=2279.807 / 2520.413
=0.9045

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))
=(176.086 / (176.086 + 1226.532)) / (190.74 / (190.74 + 1187.648))
=0.12554095 / 0.13837903
=0.9072

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)
=(291.035 / 2279.807) / (282.264 / 2520.413)
=0.12765774 / 0.11199117
=1.1399

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)
=((1416.411 + 321.01) / 4157.055) / ((1222.285 + 535.018) / 4316.695)
=0.41794516 / 0.40709455
=1.0267

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
=(106.44 - 26.444 - 267.492) / 4157.055
=-0.0451

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 -2.67 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 4.39841.99420.12360.45262.44220.46061.44330.79250.86851.0355
GMI 1.00461.23061.38651.03621.21870.93860.91421.02891.01590.9566
AQI 1.75360.91831.7241.22931.0020.92731.02981.07380.98890.9577
SGI 1.11912.21361.70941.01641.44241.96450.66341.02351.03040.9929
DEPI 0.73692.43360.67440.95212.44220.45191.00040.96740.98970.7488
SGAI 1.12720.83310.55330.8570.83960.92651.03730.9170.95531.0281
LVGI 0.98781.31190.74511.05690.53971.1651.05110.94241.02291.0109
TATA 0.01350.1824-0.4366-0.0603-0.0975-0.0572-0.0448-0.0556-0.0649-0.0656
M-score 1.070.55-4.08-3.14-0.75-2.55-2.64-2.84-2.87-2.84

Wendy's Co Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.82770.99610.87490.86850.83180.88220.94831.03551.06941.2104
GMI 1.02791.01011.01511.01590.99780.97610.95470.95660.92060.8926
AQI 1.08290.93910.98030.98890.98980.97320.97970.95771.01081.0304
SGI 1.0291.03241.03811.03041.03021.02231.01390.99290.95670.9045
DEPI 1.0371.32951.15610.98970.82320.78910.76940.74880.8670.9072
SGAI 0.91580.87780.77860.95530.94610.97921.06961.02811.11231.1399
LVGI 0.95621.05941.0381.02291.02921.01271.00111.01091.03631.0267
TATA -0.0433-0.042-0.037-0.0649-0.0719-0.0739-0.0923-0.0656-0.0546-0.0451
M-score -2.73-2.63-2.69-2.87-2.97-2.96-3.02-2.84-2.79-2.67
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