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GuruFocus has detected 3 Warning Signs with Westwood Holdings Group Inc $WHG.
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Westwood Holdings Group Inc (NYSE:WHG)
Beneish M-Score
-2.80 (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.

Westwood Holdings Group Inc has a M-score of -2.80 suggests that the company is not a manipulator.

WHG' s Beneish M-Score Range Over the Past 10 Years
Min: -3.05   Max: -0.34
Current: -2.8

-3.05
-0.34

During the past 13 years, the highest Beneish M-Score of Westwood Holdings Group Inc was -0.34. The lowest was -3.05. And the median was -2.44.


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 Westwood Holdings Group 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 * 1.2711+0.528 * 1+0.404 * 0.9748+0.892 * 0.9396+0.115 * 1.3345
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0679+4.679 * -0.1377-0.327 * 0.6676
=-2.80

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

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was $23.4 Mil.
Revenue was 31.092 + 31.777 + 31.023 + 29.129 = $123.0 Mil.
Gross Profit was 31.092 + 31.777 + 31.023 + 29.129 = $123.0 Mil.
Total Current Assets was $116.0 Mil.
Total Assets was $179.7 Mil.
Property, Plant and Equipment(Net PPE) was $4.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.9 Mil.
Selling, General & Admin. Expense(SGA) was $89.0 Mil.
Total Current Liabilities was $29.7 Mil.
Long-Term Debt was $0.0 Mil.
Net Income was 7.577 + 5.887 + 5.661 + 3.522 = $22.6 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.0 Mil.
Cash Flow from Operations was 8.395 + 8.387 + 13.385 + 17.225 = $47.4 Mil.
Accounts Receivable was $19.6 Mil.
Revenue was 31.566 + 32.451 + 37.311 + 29.608 = $130.9 Mil.
Gross Profit was 31.566 + 32.451 + 37.311 + 29.608 = $130.9 Mil.
Total Current Assets was $117.6 Mil.
Total Assets was $181.3 Mil.
Property, Plant and Equipment(Net PPE) was $2.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $2.6 Mil.
Selling, General & Admin. Expense(SGA) was $88.7 Mil.
Total Current Liabilities was $44.9 Mil.
Long-Term Debt was $0.0 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)
=(23.429 / 123.021) / (19.618 / 130.936)
=0.19044716 / 0.14982892
=1.2711

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)
=(130.936 / 130.936) / (123.021 / 123.021)
=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 - (115.957 + 4.28) / 179.678) / (1 - (117.604 + 2.192) / 181.336)
=0.33081958 / 0.33937001
=0.9748

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
=123.021 / 130.936
=0.9396

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))
=(2.596 / (2.596 + 2.192)) / (2.929 / (2.929 + 4.28))
=0.54218881 / 0.40629768
=1.3345

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)
=(89.011 / 123.021) / (88.716 / 130.936)
=0.72354313 / 0.67755239
=1.0679

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 + 29.668) / 179.678) / ((0 + 44.853) / 181.336)
=0.1651176 / 0.24734747
=0.6676

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
=(22.647 - 0 - 47.392) / 179.678
=-0.1377

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.

Westwood Holdings Group Inc has a M-score of -2.80 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.

Westwood Holdings Group Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 1.59941.49610.55340.88240.84191.02921.36890.81491.1669
GMI 011111111
AQI 0.73920.98281.30272.72360.7761.010.83180.89732.5691
SGI 1.32631.28010.9161.29991.24581.12461.18491.23321.1563
DEPI 0.9670.83840.70760.55152.18010.91731.26520.83290.4845
SGAI 6.84250.97051.10320.93970.99551.11590.93450.90731.0775
LVGI 1.26850.98040.83070.85241.19611.00741.09910.90821.2718
TATA -0.09590.3314-0.0453-0.0963-0.0426-0.0144-0.03330.0052-0.155
M-score -3.82-0.24-3.05-2.07-2.62-2.44-2.19-2.43-2.44

Westwood Holdings Group Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.90140.81490.84041.11831.25291.16691.55760.96971.17891.2711
GMI 1111111111
AQI 0.94680.89730.94682.40052.1012.56912.60231.0581.08750.9748
SGI 1.26411.23321.19681.17321.15791.15631.1161.0070.96760.9396
DEPI 0.9330.83290.94980.83130.6810.48450.56570.65640.85151.3345
SGAI 0.87520.90590.95521.01171.06161.07751.08541.12711.12121.0679
LVGI 1.04480.90821.28971.44721.05581.27181.59750.69820.7440.6676
TATA 0.02790.00520.0125-0.1675-0.1736-0.155-0.2045-0.1239-0.1346-0.1377
M-score -2.23-2.43-2.51-2.60-2.54-2.44-2.43-3.02-2.89-2.80
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