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The Wendy's Co (NAS:WEN)
Beneish M-Score
-2.12 (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 -2.12 signals that the company is a manipulator.

WEN' s Beneish M-Score Range Over the Past 10 Years
Min: -5.73   Max: 6.2
Current: -2.12

-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 -2.57.


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 * 1.8623+0.528 * 0.8027+0.404 * 1.2295+0.892 * 0.8781+0.115 * 1.0583
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.2164+4.679 * -0.0406-0.327 * 1.2744
=-2.12

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

This Year (Jun16) TTM:Last Year (Jun15) TTM:
Accounts Receivable was $115 Mil.
Revenue was 382.718 + 378.787 + 464.365 + 464.629 = $1,690 Mil.
Gross Profit was 180.164 + 164.051 + 192.049 + 173.105 = $709 Mil.
Total Current Assets was $656 Mil.
Total Assets was $4,135 Mil.
Property, Plant and Equipment(Net PPE) was $1,191 Mil.
Depreciation, Depletion and Amortization(DDA) was $140 Mil.
Selling, General & Admin. Expense(SGA) was $262 Mil.
Total Current Liabilities was $278 Mil.
Long-Term Debt was $2,485 Mil.
Net Income was 26.48 + 25.363 + 85.856 + 7.584 = $145 Mil.
Non Operating Income was 0.276 + 0.262 + 52.295 + 0.214 = $53 Mil.
Cash Flow from Operations was 53.684 + 47.274 + 93.851 + 65.515 = $260 Mil.
Accounts Receivable was $71 Mil.
Revenue was 489.534 + 451.769 + 487.303 + 496.67 = $1,925 Mil.
Gross Profit was 174.412 + 146.658 + 163.368 + 164.025 = $648 Mil.
Total Current Assets was $1,554 Mil.
Total Assets was $5,107 Mil.
Property, Plant and Equipment(Net PPE) was $1,254 Mil.
Depreciation, Depletion and Amortization(DDA) was $157 Mil.
Selling, General & Admin. Expense(SGA) was $245 Mil.
Total Current Liabilities was $298 Mil.
Long-Term Debt was $2,380 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)
=(115.304 / 1690.499) / (70.515 / 1925.276)
=0.06820708 / 0.03662592
=1.8623

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)
=(648.463 / 1925.276) / (709.369 / 1690.499)
=0.3368156 / 0.41962107
=0.8027

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 - (655.732 + 1191.353) / 4135.22) / (1 - (1553.919 + 1254.489) / 5106.545)
=0.55332848 / 0.45003755
=1.2295

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
=1690.499 / 1925.276
=0.8781

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))
=(156.668 / (156.668 + 1254.489)) / (139.627 / (139.627 + 1191.353))
=0.11102096 / 0.10490541
=1.0583

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)
=(261.854 / 1690.499) / (245.157 / 1925.276)
=0.15489746 / 0.12733603
=1.2164

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)
=((2485.414 + 277.954) / 4135.22) / ((2379.782 + 297.9) / 5106.545)
=0.66825175 / 0.52436275
=1.2744

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
=(145.283 - 53.047 - 260.324) / 4135.22
=-0.0406

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 -2.12 signals that the company is likely to 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

Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16
DSRI 1.09851.25511.35571.24341.45871.11761.21081.72231.24461.8623
GMI 0.9030.87370.84230.82480.83370.86770.88990.87640.84850.8027
AQI 1.01081.03041.01911.08191.00970.81471.01750.97680.9961.2295
SGI 0.93140.87240.81370.83070.82870.87560.92150.9290.92560.8781
DEPI 0.8670.90721.06641.28491.33081.24641.09811.02550.98711.0583
SGAI 1.1341.17061.18721.07971.02040.97130.9551.05611.12641.2164
LVGI 1.03631.02671.01241.0251.00041.25461.57291.55951.57961.2744
TATA -0.0525-0.043-0.0345-0.0327-0.0389-0.0209-0.021-0.0236-0.0301-0.0406
M-score -2.79-2.66-2.58-2.61-2.44-2.78-2.67-2.25-2.76-2.12
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