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Wright Medical Group Inc (NAS:WMGI)
Beneish M-Score
-3.53 (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 -3.53 suggests that the company is not a manipulator.

WMGI' s 10-Year Beneish M-Score Range
Min: -4.57   Max: -1.72
Current: -3.53

-4.57
-1.72

During the past 13 years, the highest Beneish M-Score of Wright Medical Group Inc was -1.72. The lowest was -4.57. 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 * 1.8379+0.528 * 0.9496+0.404 * 0.8687+0.892 * 0.7667+0.115 * 2.1541
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.431+4.679 * -0.3273-0.327 * 1.1705
=-3.53

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
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.
Net Income was -56.226 + -30.42 + -135.029 + -130.02 = $-351.7 Mil.
Non Operating Income was 18.27 + -15.286 + 2.552 + 64.019 = $69.6 Mil.
Cash Flow from Operations was -24.35 + -27.24 + -42.322 + -0.034 = $-93.9 Mil.
Accounts Receivable was $39.0 Mil.
Revenue was 60.572 + 56.293 + 123.477 + 110.363 = $350.7 Mil.
Gross Profit was 46.008 + 42.596 + 83.828 + 75.274 = $247.7 Mil.
Total Current Assets was $622.9 Mil.
Total Assets was $1,247.6 Mil.
Property, Plant and Equipment(Net PPE) was $47.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $44.8 Mil.
Selling, General & Admin. Expense(SGA) was $246.3 Mil.
Total Current Liabilities was $170.7 Mil.
Long-Term Debt was $262.8 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)
=(54.893 / 268.891) / (38.955 / 350.705)
=0.20414592 / 0.11107626
=1.8379

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)
=(53.645 / 350.705) / (52.358 / 268.891)
=0.70630872 / 0.74382557
=0.9496

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 - (509.067 + 89.261) / 999.892) / (1 - (622.923 + 47.911) / 1247.583)
=0.40160737 / 0.46229309
=0.8687

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
=268.891 / 350.705
=0.7667

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))
=(44.792 / (44.792 + 47.911)) / (25.812 / (25.812 + 89.261))
=0.48317746 / 0.22430979
=2.1541

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)
=(270.236 / 268.891) / (246.303 / 350.705)
=1.00500203 / 0.70230821
=1.431

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)
=((275.606 + 131.042) / 999.892) / ((262.775 + 170.687) / 1247.583)
=0.40669192 / 0.34744141
=1.1705

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
=(-351.695 - 69.555 - -93.946) / 999.892
=-0.3273

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 -3.53 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 0.92420.93331.10551.01311.01190.95190.97280.95081.05650.9273
GMI 1.01471.00640.99920.99841.00411.02361.00041.00781.00030.9144
AQI 0.71740.81711.30461.12240.99320.99441.11960.94411.37642.505
SGI 1.19531.07261.0621.14141.20341.04721.06450.98840.94310.5009
DEPI 0.89741.08130.94761.0561.13790.89061.0950.9190.8770.7335
SGAI 0.98471.02241.08331.02790.96140.98810.98091.08041.02051.5873
LVGI 0.85760.89630.82772.78240.97350.94750.95910.88991.09181.1038
TATA -0.03710.0431-0.042-0.03450.0079-0.0875-0.0735-0.082-0.061-0.3029
M-score -2.62-2.31-2.37-3.04-2.22-2.87-2.72-2.92-2.66-4.01

Wright Medical Group Inc Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.98171.02131.06741.05651.21390.53590.6150.92730.80561.8379
GMI 1.01861.01771.01281.00030.99110.97310.94960.91440.92020.9496
AQI 0.9591.03341.56481.37643.25223.70942.02342.5051.04820.8687
SGI 0.96390.93770.92910.94310.81990.70850.61170.50090.62190.7667
DEPI 0.88080.85320.85060.8770.90760.47990.51290.73350.85972.1541
SGAI 1.10511.13151.02611.02051.09531.15441.3521.58731.48891.431
LVGI 0.91510.91071.01881.09181.0611.14631.02761.10381.11641.1705
TATA -0.0874-0.0973-0.0749-0.061-0.0296-0.038-0.2053-0.312-0.3028-0.3273
M-score -2.95-2.96-2.62-2.66-1.72-2.40-3.88-4.05-4.57-3.53
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