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Wells Fargo & Co (NYSE:WFC)
Beneish M-Score
-2.52 (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 -2.52 suggests that the company is not a manipulator.

WFC' s Beneish M-Score Range Over the Past 10 Years
Min: -3.27   Max: 0.52
Current: -2.52

-3.27
0.52

During the past 13 years, the highest Beneish M-Score of Wells Fargo & Co was 0.52. The lowest was -3.27. And the median was -2.39.


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 * 0.9476+0.528 * 1+0.404 * 1.0003+0.892 * 1.0203+0.115 * 0.8148
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.005+4.679 * 0.0045-0.327 * 1.0238
=-2.52

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

This Year (Dec15) TTM:Last Year (Dec14) TTM:
Accounts Receivable was $26,251 Mil.
Revenue was 21586 + 21875 + 21318 + 21278 = $86,057 Mil.
Gross Profit was 21586 + 21875 + 21318 + 21278 = $86,057 Mil.
Total Current Assets was $0 Mil.
Total Assets was $1,787,632 Mil.
Property, Plant and Equipment(Net PPE) was $8,704 Mil.
Depreciation, Depletion and Amortization(DDA) was $3,288 Mil.
Selling, General & Admin. Expense(SGA) was $31,654 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $199,536 Mil.
Net Income was 5575 + 5796 + 5719 + 5804 = $22,894 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was -5029 + 18937 + -1651 + 2515 = $14,772 Mil.
Accounts Receivable was $27,151 Mil.
Revenue was 21443 + 21213 + 21066 + 20625 = $84,347 Mil.
Gross Profit was 21443 + 21213 + 21066 + 20625 = $84,347 Mil.
Total Current Assets was $0 Mil.
Total Assets was $1,687,155 Mil.
Property, Plant and Equipment(Net PPE) was $8,743 Mil.
Depreciation, Depletion and Amortization(DDA) was $2,515 Mil.
Selling, General & Admin. Expense(SGA) was $30,870 Mil.
Total Current Liabilities was $0 Mil.
Long-Term Debt was $183,943 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)
=(26251 / 86057) / (27151 / 84347)
=0.30504201 / 0.32189645
=0.9476

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)
=(21875 / 84347) / (21586 / 86057)
=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 + 8704) / 1787632) / (1 - (0 + 8743) / 1687155)
=0.99513099 / 0.9948179
=1.0003

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
=86057 / 84347
=1.0203

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))
=(2515 / (2515 + 8743)) / (3288 / (3288 + 8704))
=0.2233967 / 0.27418279
=0.8148

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)
=(31654 / 86057) / (30870 / 84347)
=0.36782598 / 0.36598812
=1.005

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)
=((199536 + 0) / 1787632) / ((183943 + 0) / 1687155)
=0.11162029 / 0.10902555
=1.0238

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
=(22894 - 0 - 14772) / 1787632
=0.0045

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 -2.52 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.

Wells Fargo & Co Annual Data

Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15
DSRI 0.6711.24710111.1490.93630.85221.25890.9476
GMI 1111111111
AQI 0.99291.00741.000311.0011.00041.00061.00061.00081.0003
SGI 1.08321.10361.06362.11680.96080.951.06350.97321.00681.0203
DEPI 1.65811.27071.78480.61651.25810.88430.81980.86731.18410.8148
SGAI 1.05321.01560.91010.96631.07011.11920.98021.05940.9861.005
LVGI 1.09330.95531.1810.80360.76120.76460.93821.12191.08561.0238
TATA -0.0406-0.00180.0057-0.0131-0.00510.0017-0.0279-0.02350.00330.0045
M-score -2.87-2.12-3.27-1.52-2.44-2.34-2.61-2.81-2.22-2.52

Wells Fargo & Co Quarterly Data

Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15Dec15Mar16
DSRI 0.85221111.25891100.94761
GMI 1111111111
AQI 1.00061.00061.00081.00081.00081.00081.00061.00031.00031.0005
SGI 0.97320.97010.96550.98241.00681.02231.02921.02811.02031.0232
DEPI 0.86730.97091.01061.10571.18411.07011.02420.93590.81480.9224
SGAI 1.05941.04611.03521.00560.9860.99831.00341.0111.0050.9922
LVGI 1.12191.12931.2261.10971.08561.06340.9950.93821.02381.1684
TATA -0.0235-0.0186-0.0077-0.00370.00330.00330.00240.00020.00450.0056
M-score -2.81-2.65-2.63-2.54-2.22-2.46-2.44-3.36-2.52-2.50
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