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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 13 years, the highest Beneish M-Score of Wright Medical Group Inc was -1.15. The lowest was -4.33. And the median was -2.68.
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 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 * 0.8004||+||0.528 * 0.9847||+||0.404 * 0.8384||+||0.892 * 1.1639||+||0.115 * 1.106|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9975||+||4.679 * -0.036||-||0.327 * 1.6097|
|This Year (Jun15) TTM:||Last Year (Jun14) TTM:|
|Accounts Receivable was $51.1 Mil.|
Revenue was 80.42 + 77.934 + 83.294 + 71.307 = $313.0 Mil.
Gross Profit was 58.785 + 58.809 + 64.197 + 54.604 = $236.4 Mil.
Total Current Assets was $656.7 Mil.
Total Assets was $1,171.8 Mil.
Property, Plant and Equipment(Net PPE) was $120.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $30.7 Mil.
Selling, General & Admin. Expense(SGA) was $313.7 Mil.
Total Current Liabilities was $208.1 Mil.
Long-Term Debt was $559.0 Mil.
Net Income was -44.315 + -49.748 + -111.23 + -61.807 = $-267.1 Mil.
Non Operating Income was -8.153 + -5.312 + -74.64 + -21.43 = $-109.5 Mil.
Cash Flow from Operations was -25.754 + -25.246 + -29.85 + -34.562 = $-115.4 Mil.
|Accounts Receivable was $54.9 Mil.
Revenue was 72.364 + 71.062 + 67.824 + 57.641 = $268.9 Mil.
Gross Profit was 52.358 + 53.645 + 50.401 + 43.604 = $200.0 Mil.
Total Current Assets was $509.1 Mil.
Total Assets was $999.9 Mil.
Property, Plant and Equipment(Net PPE) was $89.3 Mil.
Depreciation, Depletion and Amortization(DDA) was $25.8 Mil.
Selling, General & Admin. Expense(SGA) was $270.2 Mil.
Total Current Liabilities was $131.0 Mil.
Long-Term Debt was $275.6 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)|
|=||(51.135 / 312.955)||/||(54.893 / 268.891)|
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)|
|=||(58.809 / 268.891)||/||(58.785 / 312.955)|
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 - (656.662 + 120.583) / 1171.818)||/||(1 - (509.067 + 89.261) / 999.892)|
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))|
|=||(25.812 / (25.812 + 89.261))||/||(30.678 / (30.678 + 120.583))|
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)|
|=||(313.721 / 312.955)||/||(270.236 / 268.891)|
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)|
|=||((559.022 + 208.096) / 1171.818)||/||((275.606 + 131.042) / 999.892)|
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|
|=||(-267.1 - -109.535||-||-115.412)||/||1171.818|
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 -2.95 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 Inc Annual Data
Wright Medical Group Inc Quarterly Data