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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 -2.66.
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 * 0.8762||+||0.528 * 0.9987||+||0.404 * 0.8542||+||0.892 * 1.1859||+||0.115 * 1.32|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0278||+||4.679 * -0.0682||-||0.327 * 1.6488|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $52.8 Mil.|
Revenue was 77.934 + 83.294 + 71.307 + 72.364 = $304.9 Mil.
Gross Profit was 58.809 + 64.197 + 54.604 + 52.358 = $230.0 Mil.
Total Current Assets was $685.2 Mil.
Total Assets was $1,201.3 Mil.
Property, Plant and Equipment(Net PPE) was $108.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $30.0 Mil.
Selling, General & Admin. Expense(SGA) was $303.2 Mil.
Total Current Liabilities was $193.9 Mil.
Long-Term Debt was $548.5 Mil.
Net Income was -49.748 + -111.23 + -61.807 + -56.226 = $-279.0 Mil.
Non Operating Income was -5.312 + -74.64 + -21.43 + 18.27 = $-83.1 Mil.
Cash Flow from Operations was -25.246 + -29.85 + -34.562 + -24.35 = $-114.0 Mil.
|Accounts Receivable was $50.8 Mil.
Revenue was 71.062 + 67.824 + 57.641 + 60.572 = $257.1 Mil.
Gross Profit was 53.645 + 50.401 + 43.604 + 46.008 = $193.7 Mil.
Total Current Assets was $541.9 Mil.
Total Assets was $1,023.8 Mil.
Property, Plant and Equipment(Net PPE) was $75.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $30.1 Mil.
Selling, General & Admin. Expense(SGA) was $248.7 Mil.
Total Current Liabilities was $110.5 Mil.
Long-Term Debt was $273.3 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)|
|=||(52.763 / 304.899)||/||(50.778 / 257.099)|
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)|
|=||(64.197 / 257.099)||/||(58.809 / 304.899)|
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 - (685.2 + 108.852) / 1201.308)||/||(1 - (541.902 + 75.601) / 1023.849)|
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))|
|=||(30.132 / (30.132 + 75.601))||/||(29.97 / (29.97 + 108.852))|
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)|
|=||(303.171 / 304.899)||/||(248.724 / 257.099)|
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)|
|=||((548.502 + 193.851) / 1201.308)||/||((273.271 + 110.453) / 1023.849)|
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|
|=||(-279.011 - -83.112||-||-114.008)||/||1201.308|
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 -2.99 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