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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 13 years, the highest Beneish M-Score of WisdomTree Investments Inc was 29.99. The lowest was -3.18. And the median was -2.25.
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 * 0.8728||+||0.528 * 1||+||0.404 * 1.7743||+||0.892 * 0.7341||+||0.115 * 0.7752|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.3122||+||4.679 * -0.0425||-||0.327 * 1.039|
|This Year (Dec16) TTM:||Last Year (Dec15) TTM:|
|Accounts Receivable was $17.7 Mil.|
Revenue was 50.798 + 51.789 + 55.981 + 60.878 = $219.4 Mil.
Gross Profit was 50.798 + 51.789 + 55.981 + 60.878 = $219.4 Mil.
Total Current Assets was $177.2 Mil.
Total Assets was $249.8 Mil.
Property, Plant and Equipment(Net PPE) was $11.7 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.3 Mil.
Selling, General & Admin. Expense(SGA) was $144.4 Mil.
Total Current Liabilities was $43.5 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 2.477 + 7.955 + 3.651 + 12.072 = $26.2 Mil.
Non Operating Income was -18.15 + 0 + 0 + 0 = $-18.2 Mil.
Cash Flow from Operations was 10.966 + 14.949 + 22.219 + 6.777 = $54.9 Mil.
|Accounts Receivable was $27.6 Mil.
Revenue was 76.489 + 80.753 + 81.559 + 60.141 = $298.9 Mil.
Gross Profit was 76.489 + 80.753 + 81.559 + 60.141 = $298.9 Mil.
Total Current Assets was $240.5 Mil.
Total Assets was $292.7 Mil.
Property, Plant and Equipment(Net PPE) was $12.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $1.0 Mil.
Selling, General & Admin. Expense(SGA) was $149.9 Mil.
Total Current Liabilities was $49.1 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)|
|=||(17.668 / 219.446)||/||(27.576 / 298.942)|
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)|
|=||(298.942 / 298.942)||/||(219.446 / 219.446)|
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 - (177.192 + 11.748) / 249.767)||/||(1 - (240.545 + 11.974) / 292.693)|
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))|
|=||(1.006 / (1.006 + 11.974))||/||(1.305 / (1.305 + 11.748))|
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)|
|=||(144.429 / 219.446)||/||(149.936 / 298.942)|
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 + 43.527) / 249.767)||/||((0 + 49.094) / 292.693)|
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|
|=||(26.155 - -18.15||-||54.911)||/||249.767|
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 -2.81 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