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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 -2.60 suggests that the company is not a manipulator.

WEN' s 10-Year Beneish M-Score Range
Min: -5.9   Max: 6.13
Current: -2.6

-5.9
6.13

During the past 13 years, the highest Beneish M-Score of Wendy's Co was 6.13. The lowest was -5.90. And the median was -2.65.


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 * 1.2947+0.528 * 0.8626+0.404 * 1.0191+0.892 * 0.8521+0.115 * 1.0664
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.153+4.679 * -0.0366-0.327 * 1.0124
=-2.60

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $69 Mil.
Revenue was 512.489 + 523.427 + 523.196 + 592.405 = $2,152 Mil.
Gross Profit was 168.682 + 175.647 + 149.006 + 155.968 = $649 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 $280 Mil.
Total Current Liabilities was $339 Mil.
Long-Term Debt was $1,409 Mil.
Net Income was 22.83 + 29.007 + 46.303 + 33.069 = $131 Mil.
Non Operating Income was 0.373 + 0.857 + 0.523 + 22.791 = $25 Mil.
Cash Flow from Operations was 101.587 + 66.268 + 14.741 + 77.156 = $260 Mil.
Accounts Receivable was $63 Mil.
Revenue was 640.779 + 650.544 + 603.682 + 629.879 = $2,525 Mil.
Gross Profit was 171.602 + 177.246 + 142.854 + 165.603 = $657 Mil.
Total Current Assets was $859 Mil.
Total Assets was $4,324 Mil.
Property, Plant and Equipment(Net PPE) was $1,156 Mil.
Depreciation, Depletion and Amortization(DDA) was $181 Mil.
Selling, General & Admin. Expense(SGA) was $285 Mil.
Total Current Liabilities was $353 Mil.
Long-Term Debt was $1,434 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)
=(69.084 / 2151.517) / (62.62 / 2524.884)
=0.03210944 / 0.02480114
=1.2947

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)
=(175.647 / 2524.884) / (168.682 / 2151.517)
=0.26033077 / 0.30178846
=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 - (670.233 + 1234.992) / 4179.455) / (1 - (858.799 + 1156.32) / 4323.955)
=0.54414511 / 0.53396393
=1.0191

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
=2151.517 / 2524.884
=0.8521

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))
=(181.041 / (181.041 + 1156.32)) / (179.56 / (179.56 + 1234.992))
=0.13537183 / 0.12693772
=1.0664

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)
=(280.291 / 2151.517) / (285.288 / 2524.884)
=0.13027599 / 0.11299054
=1.153

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)
=((1409.066 + 339.144) / 4179.455) / ((1433.662 + 352.846) / 4323.955)
=0.41828659 / 0.41316526
=1.0124

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
=(131.209 - 24.544 - 259.752) / 4179.455
=-0.0366

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 -2.60 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 4.39840.33650.52540.62552.37730.47751.0631.05340.72771.245
GMI 1.00461.23061.13271.0311.49950.93861.00940.93191.01590.9566
AQI 1.75360.91831.7241.22931.0020.92731.02981.07090.99160.9577
SGI 1.11912.21361.70941.01641.44241.96450.95410.71171.03040.9929
DEPI 0.73692.43360.60720.94492.73340.45191.00040.96740.98970.7488
SGAI 1.12720.83310.73930.8890.60580.92650.96451.14040.82611.0281
LVGI 0.98751.31190.74511.05690.53971.1651.05110.95741.00691.0109
TATA 0.01350.1824-0.4404-0.06520.0061-0.058-0.0451-0.0554-0.0339-0.0656
M-score 1.07-0.97-3.90-3.01-0.11-2.54-2.67-2.97-2.83-2.65

Wendy's Co Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.32321.06590.80720.83180.88220.94831.2451.06941.21041.2947
GMI 0.93260.95910.98210.99780.97610.95470.95660.92060.89260.8626
AQI 0.93910.98030.99160.98980.97320.97970.95771.01081.03041.0191
SGI 0.77720.85220.9291.03021.02231.01390.99290.95670.90450.8521
DEPI 1.32951.15610.98970.82320.78910.76940.74880.8670.90721.0664
SGAI 1.08010.95230.84840.81330.83610.90381.02811.11481.14471.153
LVGI 1.05941.0381.00691.02921.01271.00111.01091.03631.02671.0124
TATA -0.042-0.037-0.0403-0.047-0.0494-0.0679-0.0656-0.0546-0.0451-0.0366
M-score -2.63-2.74-2.90-2.83-2.82-2.88-2.65-2.79-2.67-2.60
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