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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 -1.36. The lowest was -4.31. And the median was -2.78.
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 * 0.8672||+||0.528 * 1.0787||+||0.404 * 1.0861||+||0.892 * 2.1243||+||0.115 * 0.7613|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8276||+||4.679 * -0.135||-||0.327 * 2.0311|
|This Year (Jun16) TTM:||Last Year (Jun15) TTM:|
|Accounts Receivable was $125.4 Mil.|
Revenue was 170.716 + 181.027 + 169.204 + 74.944 = $595.9 Mil.
Gross Profit was 121.707 + 128.712 + 105.049 + 58.517 = $414.0 Mil.
Total Current Assets was $785.2 Mil.
Total Assets was $2,244.0 Mil.
Property, Plant and Equipment(Net PPE) was $216.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $72.1 Mil.
Selling, General & Admin. Expense(SGA) was $585.6 Mil.
Total Current Liabilities was $400.0 Mil.
Long-Term Debt was $759.5 Mil.
Net Income was -229.36 + -47.992 + -273.448 + -10.794 = $-561.6 Mil.
Non Operating Income was 2.061 + 1.068 + -93.338 + -0.255 = $-90.5 Mil.
Cash Flow from Operations was -13.488 + -9.778 + -208.777 + 63.907 = $-168.1 Mil.
|Accounts Receivable was $68.0 Mil.
Revenue was 80.42 + 77.934 + 45.477 + 76.675 = $280.5 Mil.
Gross Profit was 58.785 + 58.809 + 33.955 + 58.665 = $210.2 Mil.
Total Current Assets was $209.5 Mil.
Total Assets was $637.5 Mil.
Property, Plant and Equipment(Net PPE) was $102.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $24.2 Mil.
Selling, General & Admin. Expense(SGA) was $333.1 Mil.
Total Current Liabilities was $84.9 Mil.
Long-Term Debt was $77.3 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)|
|=||(125.35 / 595.891)||/||(68.046 / 280.506)|
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)|
|=||(210.214 / 280.506)||/||(413.985 / 595.891)|
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 - (785.198 + 216.041) / 2243.965)||/||(1 - (209.518 + 102.909) / 637.499)|
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))|
|=||(24.224 / (24.224 + 102.909))||/||(72.125 / (72.125 + 216.041))|
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)|
|=||(585.586 / 595.891)||/||(333.072 / 280.506)|
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)|
|=||((759.461 + 400.036) / 2243.965)||/||((77.308 + 84.875) / 637.499)|
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|
|=||(-561.594 - -90.464||-||-168.136)||/||2243.965|
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 -2.49 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