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Wells Fargo & Co (NYSE:WFC)
Beneish M-Score
-2.49 (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.

Wells Fargo & Co has a M-score of -2.49 suggests that the company is not a manipulator.

WFC' s Beneish M-Score Range Over the Past 10 Years
Min: -3.36   Max: 0.52
Current: -2.49

-3.36
0.52

During the past 13 years, the highest Beneish M-Score of Wells Fargo & Co was 0.52. The lowest was -3.36. And the median was -2.47.


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 Wells Fargo & 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+0.528 * 1+0.404 * 1.0007+0.892 * 1.0274+0.115 * 0.7215
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0053+4.679 * 0.0164-0.327 * 1.2403
=-2.49

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Sep16) TTM:Last Year (Sep15) TTM:
Accounts Receivable was $0 Mil.
Revenue was 22328 + 22162 + 22195 + 21586 = $88,271 Mil.
Gross Profit was 22328 + 22162 + 22195 + 21586 = $88,271 Mil.
Total Current Assets was $0 Mil.
Total Assets was $1,942,124 Mil.
Property, Plant and Equipment(Net PPE) was $8,322 Mil.
Depreciation, Depletion and Amortization(DDA) was $4,490 Mil.
Selling, General & Admin. Expense(SGA) was $32,754 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $254,835 Mil.
Net Income was 5644 + 5558 + 5462 + 5575 = $22,239 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was -2441 + -7364 + 5292 + -5029 = $-9,542 Mil.
Accounts Receivable was $0 Mil.
Revenue was 21875 + 21318 + 21278 + 21443 = $85,914 Mil.
Gross Profit was 21875 + 21318 + 21278 + 21443 = $85,914 Mil.
Total Current Assets was $0 Mil.
Total Assets was $1,751,265 Mil.
Property, Plant and Equipment(Net PPE) was $8,800 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,978 Mil.
Selling, General & Admin. Expense(SGA) was $31,711 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $185,274 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)
=(0 / 88271) / (0 / 85914)
=0 / 0
=1

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)
=(85914 / 85914) / (88271 / 88271)
=1 / 1
=1

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 - (0 + 8322) / 1942124) / (1 - (0 + 8800) / 1751265)
=0.995715 / 0.99497506
=1.0007

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
=88271 / 85914
=1.0274

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))
=(2978 / (2978 + 8800)) / (4490 / (4490 + 8322))
=0.25284429 / 0.3504527
=0.7215

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)
=(32754 / 88271) / (31711 / 85914)
=0.37106184 / 0.36910166
=1.0053

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)
=((254835 + 0) / 1942124) / ((185274 + 0) / 1751265)
=0.13121459 / 0.10579438
=1.2403

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
=(22239 - 0 - -9542) / 1942124
=0.0164

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.

Wells Fargo & Co has a M-score of -2.49 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 local exchange's currency.

Wells Fargo & Co Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI
GMI
AQI
SGI
DEPI
SGAI
LVGI
TATA
M-score

Wells Fargo & Co Quarterly Data

Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16
DSRI 111.25891100.9476111
GMI 1111111111
AQI 1.00081.00081.00081.00081.00061.00031.00031.00051.00071.0007
SGI 0.96550.98241.00681.02231.02921.02811.02031.02321.03011.0274
DEPI 1.01061.10571.18411.07011.02420.93590.81480.74380.74710.7215
SGAI 1.03521.00560.9860.99831.00341.0111.0050.99220.98841.0053
LVGI 1.2261.10971.08561.06340.9950.93821.02381.16841.23591.2403
TATA -0.0077-0.00370.00330.00330.00240.00020.00450.00270.00560.0164
M-score -2.63-2.54-2.22-2.46-2.44-3.36-2.52-2.53-2.53-2.49
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