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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.
During the past 7 years, the highest Beneish M-Score of Wright Medical Group NV was -2.47. The lowest was -2.91. And the median was -2.68.
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 NV 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 * 1.1251||+||0.528 * 0.9741||+||0.404 * 0.9706||+||0.892 * 1.0081||+||0.115 * 0.9394|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9851||+||4.679 * -0.0812||-||0.327 * 1.1641|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $62.3 Mil.|
Revenue was 74.944 + 83.221 + 88.092 + 92.403 = $338.7 Mil.
Gross Profit was 58.517 + 64.532 + 68.108 + 70.64 = $261.8 Mil.
Total Current Assets was $203.0 Mil.
Total Assets was $625.3 Mil.
Property, Plant and Equipment(Net PPE) was $102.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $40.6 Mil.
Selling, General & Admin. Expense(SGA) was $233.3 Mil.
Total Current Liabilities was $82.7 Mil.
Long-Term Debt was $77.8 Mil.
Net Income was -10.794 + -9.343 + -5.116 + -8.465 = $-33.7 Mil.
Non Operating Income was -0.255 + -0.401 + 0.394 + -1.101 = $-1.4 Mil.
Cash Flow from Operations was 11.299 + 4.445 + -2.837 + 5.525 = $18.4 Mil.
|Accounts Receivable was $54.9 Mil.
Revenue was 76.675 + 86.85 + 89.025 + 83.392 = $335.9 Mil.
Gross Profit was 58.665 + 65.623 + 66.561 + 62.125 = $253.0 Mil.
Total Current Assets was $203.8 Mil.
Total Assets was $665.7 Mil.
Property, Plant and Equipment(Net PPE) was $111.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $40.4 Mil.
Selling, General & Admin. Expense(SGA) was $234.9 Mil.
Total Current Liabilities was $78.6 Mil.
Long-Term Debt was $68.2 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(62.303 / 338.66)||/||(54.931 / 335.942)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(64.532 / 335.942)||/||(58.517 / 338.66)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (202.984 + 102.36) / 625.278)||/||(1 - (203.764 + 110.972) / 665.657)|
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.
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))|
|=||(40.357 / (40.357 + 110.972))||/||(40.578 / (40.578 + 102.36))|
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)|
|=||(233.301 / 338.66)||/||(234.93 / 335.942)|
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)|
|=||((77.774 + 82.706) / 625.278)||/||((68.201 + 78.561) / 665.657)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(-33.718 - -1.363||-||18.432)||/||625.278|
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 NV has a M-score of -2.82 suggests that the company will not be a manipulator.
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
Wright Medical Group NV Annual Data
Wright Medical Group NV Quarterly Data