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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 -1.26. The lowest was -4.31. 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 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 * 0.8092||+||0.528 * 1.0433||+||0.404 * 1.1524||+||0.892 * 2.4159||+||0.115 * 0.6301|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.6677||+||4.679 * -0.1542||-||0.327 * 2.0196|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $121.8 Mil.|
Revenue was 157.332 + 170.716 + 181.027 + 176.968 = $686.0 Mil.
Gross Profit was 111.183 + 121.707 + 128.712 + 121.525 = $483.1 Mil.
Total Current Assets was $739.4 Mil.
Total Assets was $2,316.3 Mil.
Property, Plant and Equipment(Net PPE) was $211.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $85.5 Mil.
Selling, General & Admin. Expense(SGA) was $583.8 Mil.
Total Current Liabilities was $431.3 Mil.
Long-Term Debt was $769.3 Mil.
Net Income was -110.145 + -229.36 + -47.992 + -105.777 = $-493.3 Mil.
Non Operating Income was -33.225 + 2.061 + 1.068 + -26.619 = $-56.7 Mil.
Cash Flow from Operations was -2.087 + -13.488 + -9.778 + -54.031 = $-79.4 Mil.
|Accounts Receivable was $62.3 Mil.
Revenue was 80.139 + 80.42 + 77.934 + 45.477 = $284.0 Mil.
Gross Profit was 57.087 + 58.785 + 58.809 + 33.955 = $208.6 Mil.
Total Current Assets was $203.0 Mil.
Total Assets was $625.3 Mil.
Property, Plant and Equipment(Net PPE) was $102.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $22.7 Mil.
Selling, General & Admin. Expense(SGA) was $361.9 Mil.
Total Current Liabilities was $82.7 Mil.
Long-Term Debt was $77.8 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)|
|=||(121.794 / 686.043)||/||(62.303 / 283.97)|
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)|
|=||(208.636 / 283.97)||/||(483.127 / 686.043)|
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 - (739.434 + 211.096) / 2316.326)||/||(1 - (202.984 + 102.36) / 625.278)|
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))|
|=||(22.722 / (22.722 + 102.36))||/||(85.508 / (85.508 + 211.096))|
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)|
|=||(583.831 / 686.043)||/||(361.942 / 283.97)|
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)|
|=||((769.333 + 431.332) / 2316.326)||/||((77.774 + 82.706) / 625.278)|
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|
|=||(-493.274 - -56.715||-||-79.384)||/||2316.326|
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 -2.35 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 NV Annual Data
Wright Medical Group NV Quarterly Data