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Willis Group Holdings PLC (NYSE:WSH)
Beneish M-Score
-2.43 (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 -2.43 suggests that the company is not a manipulator.

WSH' s 10-Year Beneish M-Score Range
Min: -3.34   Max: -2.19
Current: -2.43

-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 -2.42.


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 * 0.9936+0.528 * 1+0.404 * 1.0249+0.892 * 1.0432+0.115 * 1.004
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8401+4.679 * -0.0062-0.327 * 0.9816
=-2.43

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

This Year (Sep14) TTM:Last Year (Sep13) TTM:
Accounts Receivable was $1,021 Mil.
Revenue was 812 + 935 + 1097 + 919 = $3,763 Mil.
Gross Profit was 812 + 935 + 1097 + 919 = $3,763 Mil.
Total Current Assets was $10,824 Mil.
Total Assets was $15,208 Mil.
Property, Plant and Equipment(Net PPE) was $481 Mil.
Depreciation, Depletion and Amortization(DDA) was $147 Mil.
Selling, General & Admin. Expense(SGA) was $2,283 Mil.
Total Current Liabilities was $10,005 Mil.
Long-Term Debt was $2,148 Mil.
Net Income was -7 + 47 + 246 + 68 = $354 Mil.
Non Operating Income was -9 + -3 + 0 + -15 = $-27 Mil.
Cash Flow from Operations was 129 + 147 + 5 + 195 = $476 Mil.
Accounts Receivable was $985 Mil.
Revenue was 795 + 890 + 1051 + 871 = $3,607 Mil.
Gross Profit was 795 + 890 + 1051 + 871 = $3,607 Mil.
Total Current Assets was $11,014 Mil.
Total Assets was $15,323 Mil.
Property, Plant and Equipment(Net PPE) was $472 Mil.
Depreciation, Depletion and Amortization(DDA) was $145 Mil.
Selling, General & Admin. Expense(SGA) was $2,605 Mil.
Total Current Liabilities was $10,135 Mil.
Long-Term Debt was $2,339 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)
=(1021 / 3763) / (985 / 3607)
=0.27132607 / 0.27308012
=0.9936

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)
=(935 / 3607) / (812 / 3763)
=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 - (10824 + 481) / 15208) / (1 - (11014 + 472) / 15323)
=0.25664124 / 0.25040788
=1.0249

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
=3763 / 3607
=1.0432

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))
=(145 / (145 + 472)) / (147 / (147 + 481))
=0.2350081 / 0.23407643
=1.004

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)
=(2283 / 3763) / (2605 / 3607)
=0.60669678 / 0.72220682
=0.8401

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)
=((2148 + 10005) / 15208) / ((2339 + 10135) / 15323)
=0.79911888 / 0.81407035
=0.9816

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
=(354 - -27 - 476) / 15208
=-0.0062

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 -2.43 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

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.95651.10091.01860.88641.01040.07741.00691.04841.01561.0623
GMI 1111111111
AQI 1.12610.94540.99771.16361.47240.91911.00210.99990.89941.0516
SGI 1.09590.99651.0711.06181.09661.15421.02111.03451.00961.0503
DEPI 0.85280.78220.74111.58120.77380.70441.1531.06381.13790.9629
SGAI 1.02821.11580.99740.94030.78290.96631.00131.081.17470.849
LVGI 0.98881.03181.00720.99720.97130.98650.97051.00051.05390.9602
TATA 0.00280.01190.01410.00840.00480.0012-0.0021-0.0041-0.0643-0.0092
M-score -2.39-2.41-2.37-2.35-2.15-3.24-2.44-2.43-2.83-2.37

Willis Group Holdings PLC Quarterly Data

Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14
DSRI 0.97281.00481.01561.02240.98371.0311.06231.07171.07140.9936
GMI 1111111111
AQI 0.99330.95840.89940.91430.94550.95871.05161.03581.00621.0249
SGI 1.00150.99191.00961.01881.03841.05221.05031.0521.05051.0432
DEPI 1.11571.1541.13791.00970.99830.99990.96291.05361.0681.004
SGAI 0.99410.99681.17471.23891.23241.22680.8490.82770.83660.8401
LVGI 0.99651.00281.05391.04611.02971.02710.96020.96020.97540.9816
TATA -0.003-0.0055-0.0643-0.0608-0.0608-0.0681-0.0092-0.0044-0.0102-0.0062
M-score -2.50-2.51-2.83-2.82-2.82-2.79-2.37-2.32-2.37-2.43
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