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Wright Medical Group Inc (NAS:WMGI)
Beneish M-Score
-2.95 (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 -2.95 suggests that the company is not a manipulator.

WMGI' s 10-Year Beneish M-Score Range
Min: -4.33   Max: -1.15
Current: -2.95

-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 -2.68.


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 * 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
=-2.95

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

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

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)
=(51.135 / 312.955) / (54.893 / 268.891)
=0.1633941 / 0.20414592
=0.8004

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)
=(58.809 / 268.891) / (58.785 / 312.955)
=0.74382557 / 0.75536419
=0.9847

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 - (656.662 + 120.583) / 1171.818) / (1 - (509.067 + 89.261) / 999.892)
=0.33671867 / 0.40160737
=0.8384

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
=312.955 / 268.891
=1.1639

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))
=0.22430979 / 0.202815
=1.106

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)
=1.00244764 / 1.00500203
=0.9975

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)
=0.6546392 / 0.40669192
=1.6097

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
=(-267.1 - -109.535 - -115.412) / 1171.818
=-0.036

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.


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

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 0.93331.10551.01311.01190.95190.97280.95080.75511.29741.015
GMI 1.00640.99920.99841.00411.02361.00041.00780.88981.02810.999
AQI 0.81711.30461.12240.99320.99441.11960.94412.19311.57220.9099
SGI 1.07261.0621.14141.20341.04721.06450.98840.41741.13181.2298
DEPI 1.08130.94761.0561.13790.89061.0950.9190.41151.56331.5297
SGAI 1.02241.08331.02790.96140.98810.98091.08041.19391.35671.0204
LVGI 0.89630.82772.78240.97350.94750.95910.88991.09181.10391.3528
TATA 0.0431-0.042-0.03450.0079-0.0875-0.0731-0.082-0.0613-0.3029-0.0157
M-score -2.31-2.37-3.04-2.22-2.87-2.71-2.92-3.22-3.29-2.43

Wright Medical Group Inc Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 2.3070.71140.57561.74450.42391.18511.28741.0150.87620.8004
GMI 0.89460.91260.93870.98571.01941.02761.01930.9990.99870.9847
AQI 3.25223.70942.02341.57221.04820.86871.07720.90990.85420.8384
SGI 0.43140.53370.65350.84181.18191.18911.21331.22981.18591.1639
DEPI 0.90760.47990.51291.56330.85972.15412.43411.52971.321.106
SGAI 1.29021.28471.46081.45741.2641.25461.0891.02041.02780.9975
LVGI 1.0611.14631.02761.10391.11641.17051.25331.35281.64881.6097
TATA -0.0297-0.038-0.209-0.312-0.3028-0.3273-0.1439-0.0567-0.0682-0.036
M-score -1.15-2.45-3.92-3.22-4.33-3.68-2.59-2.62-2.99-2.95
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