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Willis Group Holdings PLC (NYSE:WSH)
Beneish M-Score
-2.35 (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 -2.35 suggests that the company is not a manipulator.

WSH' s 10-Year Beneish M-Score Range
Min: -3.32   Max: -1.98
Current: -2.35

-3.32
-1.98

During the past 13 years, the highest Beneish M-Score of Willis Group Holdings PLC was -1.98. The lowest was -3.32. 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 * 1.0988+0.528 * 1+0.404 * 1.0062+0.892 * 1.0505+0.115 * 1.068
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.8366+4.679 * -0.0108-0.327 * 0.9754
=-2.35

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

This Year (Jun14) TTM:Last Year (Jun13) TTM:
Accounts Receivable was $1,242 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.
Net Income was 47 + 246 + 68 + -27 = $334 Mil.
Non Operating Income was -3 + 0 + 0 + -60 = $-63 Mil.
Cash Flow from Operations was 147 + 5 + 195 + 229 = $576 Mil.
Accounts Receivable was $1,076 Mil.
Revenue was 890 + 1051 + 871 + 754 = $3,566 Mil.
Gross Profit was 890 + 1051 + 871 + 754 = $3,566 Mil.
Total Current Assets was $11,674 Mil.
Total Assets was $15,938 Mil.
Property, Plant and Equipment(Net PPE) was $452 Mil.
Depreciation, Depletion and Amortization(DDA) was $145 Mil.
Selling, General & Admin. Expense(SGA) was $2,566 Mil.
Total Current Liabilities was $10,765 Mil.
Long-Term Debt was $2,351 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)
=(1242 / 3746) / (1076 / 3566)
=0.33155366 / 0.30173864
=1.0988

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)
=(1097 / 3566) / (935 / 3746)
=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 - (12072 + 496) / 16551) / (1 - (11674 + 452) / 15938)
=0.24065011 / 0.23917681
=1.0062

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
=3746 / 3566
=1.0505

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 + 452)) / (146 / (146 + 496))
=0.24288107 / 0.22741433
=1.068

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)
=(2255 / 3746) / (2566 / 3566)
=0.60197544 / 0.71957375
=0.8366

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)
=((2302 + 10984) / 16551) / ((2351 + 10765) / 15938)
=0.80273095 / 0.82293889
=0.9754

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
=(334 - -63 - 576) / 16551
=-0.0108

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 -2.35 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 0.95651.10091.01860.88641.00790.82160.09491.05061.121.0539
GMI 1111111111
AQI 1.12610.94251.00081.16362.02840.73880.90451.00040.89941.0516
SGI 1.09590.99651.0711.06181.09931.15141.02331.03231.00961.0503
DEPI 0.85280.78220.74111.58120.77380.71641.13361.06381.13790.9629
SGAI 1.00521.1560.98470.94031.07130.70621.00181.07931.17470.849
LVGI 0.98881.03251.00650.99720.98560.9550.98820.99821.05850.9581
TATA -0.00620.00560.01410.00840.00380.0013-0.0021-0.0041-0.0643-0.0092
M-score -2.43-2.45-2.36-2.35-1.98-2.58-3.32-2.43-2.74-2.37

Willis Group Holdings PLC Quarterly Data

Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14Jun14
DSRI 0.99441.0530.9091.121.05610.93941.0651.05391.10991.0988
GMI 1111111111
AQI 0.98640.99330.95840.89940.91430.94550.95871.05161.03581.0062
SGI 1.02280.99770.9871.00961.01911.03931.05381.05031.0521.0505
DEPI 1.11551.11571.1541.13791.00970.99830.99990.96291.05361.068
SGAI 0.99650.99340.99631.17471.23911.23261.22690.8490.82770.8366
LVGI 0.98930.99651.00281.05851.04611.02971.02710.95810.96020.9754
TATA -0.0058-0.003-0.0055-0.0643-0.0608-0.0608-0.0678-0.0099-0.005-0.0108
M-score -2.48-2.43-2.60-2.74-2.79-2.86-2.75-2.38-2.29-2.35
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