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Willis Group Holdings PLC (NYSE:WSH)
Beneish M-Score
-2.40 (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.

Willis Group Holdings PLC has a M-score of -2.40 suggests that the company is not a manipulator.

WSH' s 10-Year Beneish M-Score Range
Min: -3.34   Max: -2.19
Current: -2.4

-3.34
-2.19

During the past 13 years, the highest Beneish M-Score of Willis Group Holdings PLC was -2.19. The lowest was -3.34. And the median was -2.43.


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 Willis Group Holdings PLC 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 * 1.0343+0.528 * 1+0.404 * 1.1017+0.892 * 1.0088+0.115 * 1.015
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0097+4.679 * -0.0005-0.327 * 0.9892
=-2.40

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Jun15) TTM:Last Year (Jun14) TTM:
Accounts Receivable was $1,226 Mil.
Revenue was 922 + 1087 + 958 + 812 = $3,779 Mil.
Gross Profit was 922 + 1087 + 958 + 812 = $3,779 Mil.
Total Current Assets was $12,946 Mil.
Total Assets was $18,319 Mil.
Property, Plant and Equipment(Net PPE) was $516 Mil.
Depreciation, Depletion and Amortization(DDA) was $149 Mil.
Selling, General & Admin. Expense(SGA) was $2,297 Mil.
Total Current Liabilities was $12,495 Mil.
Long-Term Debt was $2,052 Mil.
Net Income was 70 + 210 + 76 + -7 = $349 Mil.
Non Operating Income was 23 + -6 + 18 + -9 = $26 Mil.
Cash Flow from Operations was 71 + -64 + 196 + 129 = $332 Mil.
Accounts Receivable was $1,175 Mil.
Revenue was 935 + 1097 + 919 + 795 = $3,746 Mil.
Gross Profit was 935 + 1097 + 919 + 795 = $3,746 Mil.
Total Current Assets was $12,072 Mil.
Total Assets was $16,551 Mil.
Property, Plant and Equipment(Net PPE) was $496 Mil.
Depreciation, Depletion and Amortization(DDA) was $146 Mil.
Selling, General & Admin. Expense(SGA) was $2,255 Mil.
Total Current Liabilities was $10,984 Mil.
Long-Term Debt was $2,302 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)
=(1226 / 3779) / (1175 / 3746)
=0.32442445 / 0.31366791
=1.0343

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)
=(1087 / 3746) / (922 / 3779)
=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 - (12946 + 516) / 18319) / (1 - (12072 + 496) / 16551)
=0.26513456 / 0.24065011
=1.1017

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
=3779 / 3746
=1.0088

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))
=(146 / (146 + 496)) / (149 / (149 + 516))
=0.22741433 / 0.22406015
=1.015

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)
=(2297 / 3779) / (2255 / 3746)
=0.60783276 / 0.60197544
=1.0097

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)
=((2052 + 12495) / 18319) / ((2302 + 10984) / 16551)
=0.79409356 / 0.80273095
=0.9892

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
=(349 - 26 - 332) / 18319
=-0.0005

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.

Willis Group Holdings PLC has a M-score of -2.40 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 own currency.

Willis Group Holdings PLC Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.10091.01860.88641.01040.07741.00691.04841.01561.06230.9641
GMI 1111111111
AQI 0.94540.99771.16361.47240.91911.00210.99990.89941.05161.0188
SGI 0.99651.0711.06181.09661.15421.02111.03451.00961.05031.0402
DEPI 0.78220.74111.58120.77380.70441.1531.06381.13790.96291.0189
SGAI 1.11580.99740.94030.78290.96631.00131.081.17470.8491.0079
LVGI 1.03181.00720.99720.97130.98650.97051.00051.05390.96021.0068
TATA 0.01190.01410.00840.00480.0012-0.0021-0.0041-0.0643-0.0107-0.0078
M-score -2.41-2.37-2.35-2.15-3.24-2.44-2.43-2.83-2.37-2.51

Willis Group Holdings PLC Quarterly Data

Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15
DSRI 1.02240.98371.0311.06231.07171.07140.99360.96410.94721.0343
GMI 1111111111
AQI 0.91430.94550.95871.05161.03581.00621.02491.01881.08711.1017
SGI 1.01881.03841.05221.05031.0521.05051.04321.04021.02461.0088
DEPI 1.00970.99830.99990.96291.05361.0681.0041.01890.96311.015
SGAI 1.23891.23241.22680.8490.82770.83660.84011.00791.02111.0097
LVGI 1.04611.02971.02710.96020.96020.97540.98161.00680.99080.9892
TATA -0.0608-0.0608-0.0681-0.0107-0.0057-0.0115-0.0077-0.0078-0.0051-0.0005
M-score -2.82-2.82-2.79-2.37-2.33-2.38-2.44-2.51-2.50-2.40
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