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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 -4.19. 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 * 0.9649||+||0.528 * 0.8569||+||0.404 * 1.3144||+||0.892 * 1.031||+||0.115 * 1.5442|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9816||+||4.679 * 0.0076||-||0.327 * 1.1528|
|This Year (Mar15) TTM:||Last Year (Mar14) TTM:|
|Accounts Receivable was $25.5 Mil.|
Revenue was 84.181 + 89.88 + 95.423 + 89.214 = $358.7 Mil.
Gross Profit was 12.881 + 16.14 + 15.41 + 11.56 = $56.0 Mil.
Total Current Assets was $77.2 Mil.
Total Assets was $461.3 Mil.
Property, Plant and Equipment(Net PPE) was $284.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $51.7 Mil.
Selling, General & Admin. Expense(SGA) was $50.6 Mil.
Total Current Liabilities was $67.1 Mil.
Long-Term Debt was $179.1 Mil.
Net Income was 0.442 + -0.308 + -9.476 + -3.828 = $-13.2 Mil.
Non Operating Income was 0.001 + -0.016 + -14.364 + -0.02 = $-14.4 Mil.
Cash Flow from Operations was -3.533 + 4.038 + -4.424 + 1.643 = $-2.3 Mil.
|Accounts Receivable was $25.6 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 $92.3 Mil.
Selling, General & Admin. Expense(SGA) was $50.0 Mil.
Total Current Liabilities was $66.8 Mil.
Long-Term Debt was $150.0 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)|
|=||(25.48 / 358.698)||/||(25.613 / 347.897)|
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)|
|=||(16.14 / 347.897)||/||(12.881 / 358.698)|
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 - (77.167 + 284.759) / 461.309)||/||(1 - (94.645 + 296.859) / 468.254)|
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))|
|=||(92.337 / (92.337 + 296.859))||/||(51.693 / (51.693 + 284.759))|
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)|
|=||(50.572 / 358.698)||/||(49.968 / 347.897)|
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)|
|=||((179.076 + 67.132) / 461.309)||/||((150 + 66.797) / 468.254)|
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|
|=||(-13.17 - -14.399||-||-2.276)||/||461.309|
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 -2.38 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