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Wright Medical Group Inc (NAS:WMGI)
Beneish M-Score
-2.62 (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.

Wright Medical Group Inc has a M-score of -2.62 suggests that the company is not a manipulator.

WMGI' s 10-Year Beneish M-Score Range
Min: -3.23   Max: -2.22
Current: -2.62

-3.23
-2.22

During the past 13 years, the highest Beneish M-Score of Wright Medical Group Inc was -2.22. The lowest was -3.23. And the median was -2.67.


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 Wright Medical 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 * 1.015+0.528 * 0.999+0.404 * 0.9099+0.892 * 1.2298+0.115 * 1.5297
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0204+4.679 * -0.0567-0.327 * 1.3528
=-2.62

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $57.2 Mil.
Revenue was 83.294 + 71.307 + 72.364 + 71.062 = $298.0 Mil.
Gross Profit was 64.197 + 54.604 + 52.358 + 53.645 = $224.8 Mil.
Total Current Assets was $440.5 Mil.
Total Assets was $892.7 Mil.
Property, Plant and Equipment(Net PPE) was $104.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $28.6 Mil.
Selling, General & Admin. Expense(SGA) was $289.6 Mil.
Total Current Liabilities was $187.7 Mil.
Long-Term Debt was $280.6 Mil.
Net Income was -111.23 + -61.807 + -56.226 + -30.42 = $-259.7 Mil.
Non Operating Income was -74.64 + -21.43 + 18.27 + -15.286 = $-93.1 Mil.
Cash Flow from Operations was -29.85 + -34.562 + -24.35 + -27.24 = $-116.0 Mil.
Accounts Receivable was $45.8 Mil.
Revenue was 67.824 + 57.641 + 60.572 + 56.293 = $242.3 Mil.
Gross Profit was 50.401 + 43.604 + 46.008 + 42.596 = $182.6 Mil.
Total Current Assets was $505.3 Mil.
Total Assets was $1,007.5 Mil.
Property, Plant and Equipment(Net PPE) was $70.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $34.6 Mil.
Selling, General & Admin. Expense(SGA) was $230.8 Mil.
Total Current Liabilities was $119.4 Mil.
Long-Term Debt was $271.2 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)
=(57.19 / 298.027) / (45.817 / 242.33)
=0.19189537 / 0.18906863
=1.015

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)
=(54.604 / 242.33) / (64.197 / 298.027)
=0.75355507 / 0.7543075
=0.999

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 - (440.456 + 104.235) / 892.676) / (1 - (505.315 + 70.515) / 1007.451)
=0.38982229 / 0.42842878
=0.9099

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
=298.027 / 242.33
=1.2298

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))
=(34.641 / (34.641 + 70.515)) / (28.609 / (28.609 + 104.235))
=0.32942485 / 0.21535786
=1.5297

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)
=(289.62 / 298.027) / (230.785 / 242.33)
=0.97179115 / 0.95235835
=1.0204

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)
=((280.612 + 187.651) / 892.676) / ((271.227 + 119.425) / 1007.451)
=0.52456098 / 0.38776278
=1.3528

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
=(-259.683 - -93.086 - -116.002) / 892.676
=-0.0567

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.

Wright Medical Group Inc has a M-score of -2.62 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.

Wright Medical Group Inc Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.93331.10551.01311.01190.95190.97280.95080.75511.29741.015
GMI 1.00640.99920.99841.00411.02361.00041.00780.88981.02810.999
AQI 0.81711.30461.12240.99320.99441.11960.94412.19311.57220.9099
SGI 1.07261.0621.14141.20341.04721.06450.98840.41741.13181.2298
DEPI 1.08130.94761.0561.13790.89061.0950.9190.41151.56331.5297
SGAI 1.02241.08331.02790.96140.98810.98091.08041.19391.35671.0204
LVGI 0.89630.82772.78240.97350.94750.95910.88991.09181.10391.3528
TATA 0.0431-0.042-0.03450.0079-0.0875-0.0731-0.082-0.0613-0.3029-0.0157
M-score -2.31-2.37-3.04-2.22-2.87-2.71-2.92-3.22-3.29-2.43

Wright Medical Group Inc Quarterly Data

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.45910.56162.3070.71140.57561.74450.42391.18511.28741.015
GMI 0.97590.9280.89460.91260.93870.98571.01941.02761.01930.999
AQI 1.56482.19313.25223.70942.02341.57221.04820.86871.07720.9099
SGI 0.67960.56120.43140.53370.65350.84181.18191.18911.21331.2298
DEPI 0.85060.41150.90760.47990.51291.56330.85972.15412.43411.5297
SGAI 1.05691.11141.29021.28471.46081.45741.2641.25461.0891.0204
LVGI 1.01881.09181.0611.14631.02761.10391.11641.17051.25331.3528
TATA -0.0609-0.0611-0.0297-0.038-0.209-0.312-0.3028-0.3273-0.1439-0.0567
M-score -2.45-3.23-1.15-2.45-3.92-3.22-4.33-3.68-2.59-2.62
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