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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 Wal-Mart Stores Inc was -1.84. The lowest was -3.32. And the median was -2.63.
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 Wal-Mart Stores 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 * 0.9623||+||0.528 * 1.0058||+||0.404 * 0.9719||+||0.892 * 1.0199||+||0.115 * 0.9637|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0155||+||4.679 * -0.0461||-||0.327 * 0.9637|
|This Year (Oct14) TTM:||Last Year (Oct13) TTM:|
|Accounts Receivable was $6,091 Mil.|
Revenue was 119001 + 120125 + 114960 + 129706 = $483,792 Mil.
Gross Profit was 29754 + 30115 + 28246 + 31735 = $119,850 Mil.
Total Current Assets was $65,841 Mil.
Total Assets was $207,889 Mil.
Property, Plant and Equipment(Net PPE) was $117,492 Mil.
Depreciation, Depletion and Amortization(DDA) was $9,151 Mil.
Selling, General & Admin. Expense(SGA) was $93,305 Mil.
Total Current Liabilities was $71,560 Mil.
Long-Term Debt was $44,487 Mil.
Net Income was 3711 + 4093 + 3593 + 4431 = $15,828 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = $0 Mil.
Cash Flow from Operations was 3570 + 5961 + 5939 + 9937 = $25,407 Mil.
|Accounts Receivable was $6,206 Mil.
Revenue was 115688 + 116830 + 114070 + 127776 = $474,364 Mil.
Gross Profit was 29001 + 29410 + 28079 + 31705 = $118,195 Mil.
Total Current Assets was $67,142 Mil.
Total Assets was $209,876 Mil.
Property, Plant and Equipment(Net PPE) was $117,227 Mil.
Depreciation, Depletion and Amortization(DDA) was $8,774 Mil.
Selling, General & Admin. Expense(SGA) was $90,090 Mil.
Total Current Liabilities was $77,021 Mil.
Long-Term Debt was $44,543 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)|
|=||(6091 / 483792)||/||(6206 / 474364)|
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)|
|=||(30115 / 474364)||/||(29754 / 483792)|
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 - (65841 + 117492) / 207889)||/||(1 - (67142 + 117227) / 209876)|
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))|
|=||(8774 / (8774 + 117227))||/||(9151 / (9151 + 117492))|
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)|
|=||(93305 / 483792)||/||(90090 / 474364)|
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)|
|=||((44487 + 71560) / 207889)||/||((44543 + 77021) / 209876)|
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|
|=||(15828 - 0||-||25407)||/||207889|
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.
Wal-Mart Stores Inc has a M-score of -2.72 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
Wal-Mart Stores Inc Annual Data
Wal-Mart Stores Inc Quarterly Data