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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 8 years, the highest Beneish M-Score of Wright Medical Group NV was -1.69. The lowest was -2.91. And the median was -2.65.
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 * 1.1672||+||0.528 * 1.0894||+||0.404 * 1.2194||+||0.892 * 1.4778||+||0.115 * 1.5075|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.4426||+||4.679 * -0.0232||-||0.327 * 1.4643|
|This Year (Mar16) TTM:||Last Year (Mar15) TTM:|
|Accounts Receivable was $127.3 Mil.|
Revenue was 181.027 + 169.204 + 74.944 + 83.221 = $508.4 Mil.
Gross Profit was 128.712 + 105.049 + 58.517 + 64.532 = $356.8 Mil.
Total Current Assets was $527.9 Mil.
Total Assets was $1,979.5 Mil.
Property, Plant and Equipment(Net PPE) was $236.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $56.0 Mil.
Selling, General & Admin. Expense(SGA) was $508.2 Mil.
Total Current Liabilities was $200.0 Mil.
Long-Term Debt was $570.4 Mil.
Net Income was -47.992 + -273.448 + -10.794 + -9.343 = $-341.6 Mil.
Non Operating Income was 1.068 + -93.338 + -0.255 + -0.401 = $-92.9 Mil.
Cash Flow from Operations was -9.778 + -208.777 + 11.299 + 4.445 = $-202.8 Mil.
|Accounts Receivable was $73.8 Mil.
Revenue was 88.092 + 92.403 + 76.675 + 86.85 = $344.0 Mil.
Gross Profit was 68.108 + 70.64 + 58.665 + 65.623 = $263.0 Mil.
Total Current Assets was $219.5 Mil.
Total Assets was $645.5 Mil.
Property, Plant and Equipment(Net PPE) was $101.2 Mil.
Depreciation, Depletion and Amortization(DDA) was $41.0 Mil.
Selling, General & Admin. Expense(SGA) was $238.4 Mil.
Total Current Liabilities was $94.3 Mil.
Long-Term Debt was $77.3 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)|
|=||(127.336 / 508.396)||/||(73.823 / 344.02)|
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)|
|=||(105.049 / 344.02)||/||(128.712 / 508.396)|
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 - (527.89 + 236.79) / 1979.471)||/||(1 - (219.451 + 101.209) / 645.53)|
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))|
|=||(41.027 / (41.027 + 101.209))||/||(56.025 / (56.025 + 236.79))|
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)|
|=||(508.221 / 508.396)||/||(238.398 / 344.02)|
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)|
|=||((570.434 + 199.961) / 1979.471)||/||((77.286 + 94.292) / 645.53)|
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|
|=||(-341.577 - -92.926||-||-202.811)||/||1979.471|
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 -2.04 signals that the company is likely to 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