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Willis Group Holdings PLC (NYSE:WSH)
Beneish M-Score
-2.51 (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 -2.51 suggests that the company is not a manipulator.

WSH' s 10-Year Beneish M-Score Range
Min: -3.19   Max: -2.19
Current: -2.51

-3.19
-2.19

During the past 13 years, the highest Beneish M-Score of Willis Group Holdings PLC was -2.19. The lowest was -3.19. And the median was -2.44.


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 * 0.9641+0.528 * 1+0.404 * 1.0188+0.892 * 1.0402+0.115 * 1.0189
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0079+4.679 * -0.0078-0.327 * 1.0068
=-2.51

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

This Year (Dec14) TTM:Last Year (Dec13) TTM:
Accounts Receivable was $1,044 Mil.
Revenue was 958 + 812 + 935 + 1097 = $3,802 Mil.
Gross Profit was 958 + 812 + 935 + 1097 = $3,802 Mil.
Total Current Assets was $10,853 Mil.
Total Assets was $15,435 Mil.
Property, Plant and Equipment(Net PPE) was $483 Mil.
Depreciation, Depletion and Amortization(DDA) was $146 Mil.
Selling, General & Admin. Expense(SGA) was $2,314 Mil.
Total Current Liabilities was $10,232 Mil.
Long-Term Debt was $2,142 Mil.
Net Income was 76 + -7 + 47 + 246 = $362 Mil.
Non Operating Income was 18 + -9 + -3 + 0 = $6 Mil.
Cash Flow from Operations was 196 + 129 + 147 + 5 = $477 Mil.
Accounts Receivable was $1,041 Mil.
Revenue was 919 + 795 + 890 + 1051 = $3,655 Mil.
Gross Profit was 919 + 795 + 890 + 1051 = $3,655 Mil.
Total Current Assets was $10,461 Mil.
Total Assets was $14,800 Mil.
Property, Plant and Equipment(Net PPE) was $481 Mil.
Depreciation, Depletion and Amortization(DDA) was $149 Mil.
Selling, General & Admin. Expense(SGA) was $2,207 Mil.
Total Current Liabilities was $9,474 Mil.
Long-Term Debt was $2,311 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)
=(1044 / 3802) / (1041 / 3655)
=0.27459232 / 0.28481532
=0.9641

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)
=(812 / 3655) / (958 / 3802)
=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 - (10853 + 483) / 15435) / (1 - (10461 + 481) / 14800)
=0.26556527 / 0.26067568
=1.0188

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
=3802 / 3655
=1.0402

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))
=(149 / (149 + 481)) / (146 / (146 + 483))
=0.23650794 / 0.23211447
=1.0189

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)
=(2314 / 3802) / (2207 / 3655)
=0.60862704 / 0.60383037
=1.0079

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)
=((2142 + 10232) / 15435) / ((2311 + 9474) / 14800)
=0.80168448 / 0.79628378
=1.0068

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
=(362 - 6 - 477) / 15435
=-0.0078

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 -2.51 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

Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14Sep14Dec14
DSRI 1.00481.01561.02240.98371.0311.06231.07171.07140.99360.9641
GMI 1111111111
AQI 0.95840.89940.91430.94550.95871.05161.03581.00621.02491.0188
SGI 0.99191.00961.01881.03841.05221.05031.0521.05051.04321.0402
DEPI 1.1541.13791.00970.99830.99990.96291.05361.0681.0041.0189
SGAI 0.99681.17471.23891.23241.22680.8490.82770.83660.84011.0079
LVGI 1.00281.05391.04611.02971.02710.96020.96020.97540.98161.0068
TATA -0.0055-0.0643-0.0608-0.0608-0.0681-0.0107-0.0057-0.0115-0.0077-0.0078
M-score -2.51-2.83-2.82-2.82-2.79-2.37-2.33-2.38-2.44-2.51
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