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Wright Medical Group Inc (NAS:WMGI)
Beneish M-Score
-2.59 (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 -2.59 suggests that the company is not a manipulator.

WMGI' s 10-Year Beneish M-Score Range
Min: -4.33   Max: -1.15
Current: -2.59

-4.33
-1.15

During the past 13 years, the highest Beneish M-Score of Wright Medical Group Inc was -1.15. The lowest was -4.33. And the median was -2.66.


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 * 1.2874+0.528 * 1.0193+0.404 * 1.0772+0.892 * 1.2133+0.115 * 2.4341
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.089+4.679 * -0.1439-0.327 * 1.2533
=-2.59

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $56.7 Mil.
Revenue was 71.307 + 72.364 + 71.062 + 67.824 = $282.6 Mil.
Gross Profit was 54.604 + 52.358 + 53.645 + 50.401 = $211.0 Mil.
Total Current Assets was $489.7 Mil.
Total Assets was $966.7 Mil.
Property, Plant and Equipment(Net PPE) was $95.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $22.5 Mil.
Selling, General & Admin. Expense(SGA) was $274.1 Mil.
Total Current Liabilities was $158.5 Mil.
Long-Term Debt was $278.4 Mil.
Net Income was -61.807 + -56.226 + -30.42 + -135.029 = $-283.5 Mil.
Non Operating Income was -21.43 + 18.27 + -15.286 + 2.552 = $-15.9 Mil.
Cash Flow from Operations was -34.562 + -24.35 + -27.24 + -42.322 = $-128.5 Mil.
Accounts Receivable was $36.3 Mil.
Revenue was 57.641 + 60.572 + 56.293 + 58.38 = $232.9 Mil.
Gross Profit was 43.604 + 46.008 + 42.596 + 45.058 = $177.3 Mil.
Total Current Assets was $619.8 Mil.
Total Assets was $1,058.6 Mil.
Property, Plant and Equipment(Net PPE) was $50.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $44.1 Mil.
Selling, General & Admin. Expense(SGA) was $207.5 Mil.
Total Current Liabilities was $116.8 Mil.
Long-Term Debt was $265.0 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)
=(56.706 / 282.557) / (36.304 / 232.886)
=0.20068871 / 0.15588743
=1.2874

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)
=(52.358 / 232.886) / (54.604 / 282.557)
=0.7611707 / 0.7467803
=1.0193

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 - (489.735 + 95.276) / 966.701) / (1 - (619.76 + 50.838) / 1058.626)
=0.3948377 / 0.36653927
=1.0772

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
=282.557 / 232.886
=1.2133

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))
=(44.078 / (44.078 + 50.838)) / (22.463 / (22.463 + 95.276))
=0.46438957 / 0.1907864
=2.4341

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)
=(274.108 / 282.557) / (207.463 / 232.886)
=0.97009807 / 0.890835
=1.089

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)
=((278.427 + 158.47) / 966.701) / ((264.952 + 116.793) / 1058.626)
=0.45194636 / 0.36060422
=1.2533

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
=(-283.482 - -15.894 - -128.474) / 966.701
=-0.1439

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 -2.59 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.92420.93331.10551.01311.01190.95190.97280.95080.75511.2974
GMI 1.01471.00640.99920.99841.00411.02361.00041.00780.88981.0281
AQI 0.71740.81711.30461.12240.99320.99441.11960.94412.19311.5722
SGI 1.19531.07261.0621.14141.20341.04721.06450.98840.41741.1318
DEPI 0.89741.08130.94761.0561.13790.89061.0950.9190.41151.5633
SGAI 0.98471.02241.08331.02790.96140.98810.98091.08041.19391.3567
LVGI 0.85760.89630.82772.78240.97350.94750.95910.88991.09181.1039
TATA -0.03710.0431-0.042-0.03450.0079-0.0875-0.0731-0.082-0.0613-0.3029
M-score -2.62-2.31-2.37-3.04-2.22-2.87-2.71-2.92-3.22-3.29

Wright Medical Group Inc Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 1.19321.45910.56162.3070.71140.57561.74450.42391.18511.2874
GMI 1.00270.97590.9280.89460.91260.93870.98571.01941.02761.0193
AQI 1.03341.56482.19313.25223.70942.02341.57221.04820.86871.0772
SGI 0.80260.67960.56120.43140.53370.65350.84181.18191.18911.2133
DEPI 0.85320.85060.41150.90760.47990.51291.56330.85972.15412.4341
SGAI 1.15961.05691.11141.29021.28471.46081.45741.2641.25461.089
LVGI 0.91071.01881.09181.0611.14631.02761.10391.11641.17051.2533
TATA -0.0849-0.0609-0.0611-0.0297-0.038-0.209-0.312-0.3028-0.3273-0.1439
M-score -2.88-2.45-3.23-1.15-2.45-3.92-3.22-4.33-3.68-2.59
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