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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.
During the past 11 years, the highest Beneish M-Score of WisdomTree Investments Inc was -1.22. The lowest was -2.72. And the median was -1.93.
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 WisdomTree Investments Inc 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 * 0.8404||+||0.528 * 1||+||0.404 * 1.1141||+||0.892 * 1.2294||+||0.115 * 0.8932|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9259||+||4.679 * -0.0978||-||0.327 * 0.6506|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $18.2 Mil.|
Revenue was 49.6 + 47.114 + 44.128 + 42.92 = $183.8 Mil.
Gross Profit was 49.6 + 47.114 + 44.128 + 42.92 = $183.8 Mil.
Total Current Assets was $189.0 Mil.
Total Assets was $220.8 Mil.
Property, Plant and Equipment(Net PPE) was $10.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.8 Mil.
Selling, General & Admin. Expense(SGA) was $104.3 Mil.
Total Current Liabilities was $29.4 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 9.622 + 10.623 + 10.602 + 30.204 = $61.1 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 25.98 + 23.99 + 23.226 + 9.434 = $82.6 Mil.
|Accounts Receivable was $17.6 Mil.
Revenue was 43.166 + 39.63 + 37.331 + 29.341 = $149.5 Mil.
Gross Profit was 43.166 + 39.63 + 37.331 + 29.341 = $149.5 Mil.
Total Current Assets was $123.2 Mil.
Total Assets was $141.8 Mil.
Property, Plant and Equipment(Net PPE) was $6.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.4 Mil.
Selling, General & Admin. Expense(SGA) was $91.6 Mil.
Total Current Liabilities was $29.1 Mil.
Long-Term Debt was $0.0 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(18.176 / 183.762)||/||(17.591 / 149.468)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(47.114 / 149.468)||/||(49.6 / 183.762)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (189.04 + 10.356) / 220.751)||/||(1 - (123.227 + 6.252) / 141.791)|
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.
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))|
|=||(0.439 / (0.439 + 6.252))||/||(0.821 / (0.821 + 10.356))|
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)|
|=||(104.269 / 183.762)||/||(91.601 / 149.468)|
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)|
|=||((0 + 29.431) / 220.751)||/||((0 + 29.056) / 141.791)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(61.051 - 0||-||82.63)||/||220.751|
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.
WisdomTree Investments Inc has a M-score of -2.72 suggests that the company will not be a manipulator.
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
WisdomTree Investments Inc Annual Data
WisdomTree Investments Inc Quarterly Data