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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.
Wausau Paper Corp has a M-score of -3.55 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Wausau Paper Corp was -1.64. The lowest was -3.86. And the median was -2.61.
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 * 0.3529||+||0.528 * 1.2796||+||0.404 * 1.3162||+||0.892 * 1.0216||+||0.115 * 0.3697|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.8062||+||4.679 * -0.1561||-||0.327 * 1.014|
|This Year (Mar14) TTM:||Last Year (Mar13) TTM:|
|Accounts Receivable was $27.1 Mil.|
Revenue was 77.507 + 91.104 + 91.663 + 87.623 = $347.9 Mil.
Gross Profit was 8.209 + 15.14 + 13.373 + 9.813 = $46.5 Mil.
Total Current Assets was $94.6 Mil.
Total Assets was $468.3 Mil.
Property, Plant and Equipment(Net PPE) was $296.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $79.2 Mil.
Selling, General & Admin. Expense(SGA) was $50.0 Mil.
Total Current Liabilities was $66.8 Mil.
Long-Term Debt was $150.0 Mil.
Net Income was -4.9 + -9.982 + -2.852 + -54.826 = $-72.6 Mil.
Non Operating Income was 0.023 + 0.011 + -0.01 + 0.01 = $0.0 Mil.
Cash Flow from Operations was -7.325 + 3.649 + -10.165 + 14.324 = $0.5 Mil.
|Accounts Receivable was $75.3 Mil.
Revenue was 78.194 + 86.961 + 86.811 + 88.559 = $340.5 Mil.
Gross Profit was 11.276 + 14.888 + 15.336 + 16.784 = $58.3 Mil.
Total Current Assets was $181.5 Mil.
Total Assets was $697.9 Mil.
Property, Plant and Equipment(Net PPE) was $429.5 Mil.
Depreciation, Depletion and Amortization(DDA) was $36.3 Mil.
Selling, General & Admin. Expense(SGA) was $60.7 Mil.
Total Current Liabilities was $98.2 Mil.
Long-Term Debt was $220.5 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)|
|=||(27.145 / 347.897)||/||(75.289 / 340.525)|
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)|
|=||(15.14 / 340.525)||/||(8.209 / 347.897)|
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 - (94.645 + 296.859) / 468.254)||/||(1 - (181.467 + 429.521) / 697.899)|
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))|
|=||(36.251 / (36.251 + 429.521))||/||(79.15 / (79.15 + 296.859))|
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)|
|=||(49.968 / 347.897)||/||(60.663 / 340.525)|
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)|
|=||((150 + 66.797) / 468.254)||/||((220.5 + 98.172) / 697.899)|
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|
|=||(-72.56 - 0.034||-||0.483)||/||468.254|
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 -3.55 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