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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 Wausau Paper Corp was -1.64. The lowest was -3.99. And the median was -2.62.
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 Wausau Paper Corp 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 * 1.0565||+||0.528 * 0.7849||+||0.404 * 1.0822||+||0.892 * 1.0202||+||0.115 * 0.7264|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8323||+||4.679 * -0.0271||-||0.327 * 0.9774|
|This Year (Sep15) TTM:||Last Year (Sep14) TTM:|
|Accounts Receivable was $29.4 Mil.|
Revenue was 95.446 + 90.894 + 84.181 + 89.88 = $360.4 Mil.
Gross Profit was 18.976 + 17.406 + 12.881 + 16.14 = $65.4 Mil.
Total Current Assets was $76.2 Mil.
Total Assets was $448.6 Mil.
Property, Plant and Equipment(Net PPE) was $277.4 Mil.
Depreciation, Depletion and Amortization(DDA) was $41.6 Mil.
Selling, General & Admin. Expense(SGA) was $45.8 Mil.
Total Current Liabilities was $66.0 Mil.
Long-Term Debt was $169.6 Mil.
Net Income was 1.6 + 2.091 + 0.442 + -0.308 = $3.8 Mil.
Non Operating Income was -0.017 + -0.015 + 0.001 + -0.016 = $-0.0 Mil.
Cash Flow from Operations was 7.553 + 7.951 + -3.533 + 4.038 = $16.0 Mil.
|Accounts Receivable was $27.3 Mil.
Revenue was 95.423 + 89.214 + 77.507 + 91.104 = $353.2 Mil.
Gross Profit was 15.41 + 11.56 + 8.209 + 15.14 = $50.3 Mil.
Total Current Assets was $78.6 Mil.
Total Assets was $463.2 Mil.
Property, Plant and Equipment(Net PPE) was $294.0 Mil.
Depreciation, Depletion and Amortization(DDA) was $30.8 Mil.
Selling, General & Admin. Expense(SGA) was $53.9 Mil.
Total Current Liabilities was $77.7 Mil.
Long-Term Debt was $171.2 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)|
|=||(29.417 / 360.401)||/||(27.29 / 353.248)|
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)|
|=||(50.319 / 353.248)||/||(65.403 / 360.401)|
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 - (76.177 + 277.417) / 448.558)||/||(1 - (78.561 + 294.04) / 463.219)|
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))|
|=||(30.788 / (30.788 + 294.04))||/||(41.632 / (41.632 + 277.417))|
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)|
|=||(45.758 / 360.401)||/||(53.887 / 353.248)|
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)|
|=||((169.579 + 65.975) / 448.558)||/||((171.16 + 77.714) / 463.219)|
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|
|=||(3.825 - -0.047||-||16.009)||/||448.558|
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.
Wausau Paper Corp has a M-score of -2.61 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
Wausau Paper Corp Annual Data
Wausau Paper Corp Quarterly Data