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GuruFocus has detected 1 Warning Sign with Winmark Corp $WINA.
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Winmark Corp (NAS:WINA)
Beneish M-Score
-2.19 (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.

Winmark Corp has a M-score of -2.19 signals that the company is a manipulator.

WINA' s Beneish M-Score Range Over the Past 10 Years
Min: -5.29   Max: 3.59
Current: -2.19

-5.29
3.59

During the past 13 years, the highest Beneish M-Score of Winmark Corp was 3.59. The lowest was -5.29. And the median was -2.79.


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 Winmark Corp 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 * 1.5646+0.528 * 0.9931+0.404 * 1.1171+0.892 * 0.9587+0.115 * 0.7903
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.914+4.679 * -0.0709-0.327 * 0.6886
=-2.19

* 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 $0.01 Mil.
Revenue was 17.366 + 16.734 + 16.3 + 16.18 = $66.58 Mil.
Gross Profit was 17.049 + 16.235 + 15.712 + 15.483 = $64.48 Mil.
Total Current Assets was $22.79 Mil.
Total Assets was $48.58 Mil.
Property, Plant and Equipment(Net PPE) was $0.77 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.42 Mil.
Selling, General & Admin. Expense(SGA) was $26.16 Mil.
Total Current Liabilities was $7.36 Mil.
Long-Term Debt was $43.33 Mil.
Net Income was 6.166 + 6.094 + 5.394 + 4.563 = $22.22 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0.00 Mil.
Cash Flow from Operations was 5.726 + 6.78 + 2.549 + 10.607 = $25.66 Mil.
Accounts Receivable was $0.01 Mil.
Revenue was 16.948 + 16 + 15.477 + 21.024 = $69.45 Mil.
Gross Profit was 16.35 + 15.288 + 14.831 + 20.326 = $66.80 Mil.
Total Current Assets was $24.43 Mil.
Total Assets was $47.41 Mil.
Property, Plant and Equipment(Net PPE) was $1.12 Mil.
Depreciation, Depletion and Amortization(DDA) was $0.43 Mil.
Selling, General & Admin. Expense(SGA) was $29.85 Mil.
Total Current Liabilities was $7.51 Mil.
Long-Term Debt was $64.32 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)
=(0.012 / 66.58) / (0.008 / 69.449)
=0.00018023 / 0.00011519
=1.5646

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)
=(66.795 / 69.449) / (64.479 / 66.58)
=0.96178491 / 0.96844398
=0.9931

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 - (22.794 + 0.77) / 48.582) / (1 - (24.431 + 1.122) / 47.406)
=0.51496439 / 0.4609754
=1.1171

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
=66.58 / 69.449
=0.9587

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))
=(0.434 / (0.434 + 1.122)) / (0.42 / (0.42 + 0.77))
=0.27892031 / 0.35294118
=0.7903

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)
=(26.16 / 66.58) / (29.854 / 69.449)
=0.39291078 / 0.4298694
=0.914

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)
=((43.327 + 7.358) / 48.582) / ((64.317 + 7.511) / 47.406)
=1.04328764 / 1.51516686
=0.6886

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
=(22.217 - 0 - 25.662) / 48.582
=-0.0709

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.

Winmark Corp has a M-score of -2.19 signals that the company is likely to 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.

Winmark Corp Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.92131.08680.58560.06997.74910.01580.79890.91090.39151.5646
GMI 0.98980.98260.97890.92750.99161.00460.98871.00340.99520.9931
AQI 1.04950.79550.69481.29480.92911.13430.73681.14871.01451.1171
SGI 1.13861.13671.05281.10481.24591.01181.07291.09781.13520.9587
DEPI 0.82520.73221.93671.07890.84410.94151.09331.05890.80760.7877
SGAI 0.99730.87490.92010.95730.9580.90271.00470.9741.03390.914
LVGI 1.35110.93890.61920.81290.4492.89180.42052.26733.37290.6886
TATA -0.05-0.0806-0.136-0.043-0.1067-0.0325-0.06440.0381-0.0105-0.0709
M-score -2.78-2.74-3.34-3.283.59-4.08-2.81-2.64-3.77-2.19

Winmark Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 0.9290.91090.95461.99961.67630.39151.18540.86641.11281.5646
GMI 0.98480.98670.98610.99370.99170.99521.00331.00290.99930.9931
AQI 1.12091.14870.99041.01121.03211.01450.95891.07941.01261.1171
SGI 1.06681.09781.1841.20891.16881.13520.9550.9470.96330.9587
DEPI 1.31811.05911.00520.87980.82760.80480.78480.77660.77630.7903
SGAI 1.0311.01191.0531.03211.01421.03390.95350.92860.9280.914
LVGI 3.00062.26730.63882.84962.71783.37294.09460.73910.71310.6886
TATA -0.01990.0381-0.0237-0.02540.0221-0.0106-0.0195-0.0398-0.0544-0.0709
M-score -3.16-2.65-2.37-2.12-2.18-3.77-3.48-2.73-2.58-2.19
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