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GuruFocus has detected 3 Warning Signs with World Acceptance Corp $WRLD.
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World Acceptance Corp (NAS:WRLD)
Beneish M-Score
-3.33 (As of Today)

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.

World Acceptance Corp has a M-score of -3.33 suggests that the company is not a manipulator.

WRLD' s Beneish M-Score Range Over the Past 10 Years
Min: -3.39   Max: -2.68
Current: -3.33

-3.39
-2.68

During the past 13 years, the highest Beneish M-Score of World Acceptance Corp was -2.68. The lowest was -3.39. And the median was -3.07.


Definition

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 World Acceptance 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+0.528 * 1+0.404 * 0.9981+0.892 * 0.915+0.115 * 0.98
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0611+4.679 * -0.1743-0.327 * 0.8189
=-3.33

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

This Year (Dec16) TTM:Last Year (Dec15) TTM:
Accounts Receivable was USD 0.0 Mil.
Revenue was 125.54 + 123.75 + 121.494 + 137.184 = USD 508.0 Mil.
Gross Profit was 125.54 + 123.75 + 121.494 + 137.184 = USD 508.0 Mil.
Total Current Assets was USD 0.0 Mil.
Total Assets was USD 860.9 Mil.
Property, Plant and Equipment(Net PPE) was USD 23.8 Mil.
Depreciation, Depletion and Amortization(DDA) was USD 7.4 Mil.
Selling, General & Admin. Expense(SGA) was USD 204.4 Mil.
Total Current Liabilities was USD 0.0 Mil.
Long-Term Debt was USD 397.9 Mil.
Net Income was 9.64 + 15.491 + 16.618 + 29.826 = USD 71.6 Mil.
Non Operating Income was 0 + 0 + 0 + 0 = USD 0.0 Mil.
Cash Flow from Operations was 53.256 + 47.012 + 55.722 + 65.628 = USD 221.6 Mil.
Accounts Receivable was USD 0.0 Mil.
Revenue was 132.547 + 129.143 + 131.753 + 161.725 = USD 555.2 Mil.
Gross Profit was 132.547 + 129.143 + 131.753 + 161.725 = USD 555.2 Mil.
Total Current Assets was USD 0.0 Mil.
Total Assets was USD 907.0 Mil.
Property, Plant and Equipment(Net PPE) was USD 23.3 Mil.
Depreciation, Depletion and Amortization(DDA) was USD 7.0 Mil.
Selling, General & Admin. Expense(SGA) was USD 210.5 Mil.
Total Current Liabilities was USD 0.0 Mil.
Long-Term Debt was USD 511.9 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(0 / 507.968) / (0 / 555.168)
=0 / 0
=1

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.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(555.168 / 555.168) / (507.968 / 507.968)
=1 / 1
=1

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (0 + 23.762) / 860.937) / (1 - (0 + 23.313) / 906.977)
=0.97239984 / 0.97429593
=0.9981

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.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=507.968 / 555.168
=0.915

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))
=(7.028 / (7.028 + 23.313)) / (7.355 / (7.355 + 23.762))
=0.23163376 / 0.23636597
=0.98

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)
=(204.393 / 507.968) / (210.524 / 555.168)
=0.40237377 / 0.37920774
=1.0611

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)
=((397.936 + 0) / 860.937) / ((511.935 + 0) / 906.977)
=0.46221268 / 0.56444099
=0.8189

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(71.575 - 0 - 221.618) / 860.937
=-0.1743

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.

World Acceptance Corp has a M-score of -3.33 suggests that the company will not be a manipulator.


Related Terms

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


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

World Acceptance Corp Annual Data

Mar07Mar08Mar09Mar10Mar11Mar12Mar13Mar14Mar15Mar16
DSRI
GMI
AQI
SGI
DEPI
SGAI
LVGI
TATA
M-score

World Acceptance Corp Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1111111111
GMI 1111111111
AQI 0.99850.9980.99930.99971.0021.00210.99850.99930.99770.9981
SGI 1.01420.97581.01531.00080.98260.9860.90410.89980.9110.915
DEPI 1.11931.08921.04251.00510.93220.94161.00640.97671.01330.98
SGAI 0.9870.96521.10771.01650.91840.90620.90880.96871.04661.0611
LVGI 1.12471.02430.9730.89940.90150.89470.80320.79270.77810.8189
TATA -0.1702-0.1521-0.1513-0.1226-0.1147-0.1137-0.1472-0.17-0.1809-0.1743
M-score -3.29-3.21-3.18-3.02-2.99-2.98-3.17-3.29-3.34-3.33
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