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GuruFocus has detected 7 Warning Signs with Weight Watchers International Inc $WTW.
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Weight Watchers International Inc (NYSE:WTW)
Beneish M-Score
-2.69 (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.

Weight Watchers International Inc has a M-score of -2.69 suggests that the company is not a manipulator.

WTW' s Beneish M-Score Range Over the Past 10 Years
Min: -3.27   Max: -1.97
Current: -2.69

-3.27
-1.97

During the past 13 years, the highest Beneish M-Score of Weight Watchers International Inc was -1.97. The lowest was -3.27. And the median was -2.78.


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 Weight Watchers International Inc 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 * 0.9394+0.528 * 0.9809+0.404 * 1.0988+0.892 * 1.0004+0.115 * 0.9272
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 0.9471+4.679 * -0.0392-0.327 * 0.9979
=-2.69

* 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 $28 Mil.
Revenue was 267.412 + 280.819 + 309.761 + 306.91 = $1,165 Mil.
Gross Profit was 130.477 + 144.303 + 161.048 + 149.673 = $586 Mil.
Total Current Assets was $235 Mil.
Total Assets was $1,271 Mil.
Property, Plant and Equipment(Net PPE) was $50 Mil.
Depreciation, Depletion and Amortization(DDA) was $53 Mil.
Selling, General & Admin. Expense(SGA) was $385 Mil.
Total Current Liabilities was $292 Mil.
Long-Term Debt was $1,981 Mil.
Net Income was 13.299 + 34.658 + 30.494 + -10.753 = $68 Mil.
Non Operating Income was -1.127 + 0.146 + -0.607 + 0.065 = $-2 Mil.
Cash Flow from Operations was 25.127 + 47.551 + 3.033 + 43.333 = $119 Mil.
Accounts Receivable was $29 Mil.
Revenue was 259.238 + 273.324 + 309.754 + 322.103 = $1,164 Mil.
Gross Profit was 120.798 + 136.622 + 159.364 + 157.303 = $574 Mil.
Total Current Assets was $351 Mil.
Total Assets was $1,394 Mil.
Property, Plant and Equipment(Net PPE) was $58 Mil.
Depreciation, Depletion and Amortization(DDA) was $53 Mil.
Selling, General & Admin. Expense(SGA) was $406 Mil.
Total Current Liabilities was $503 Mil.
Long-Term Debt was $1,996 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)
=(27.518 / 1164.902) / (29.281 / 1164.419)
=0.02362259 / 0.02514645
=0.9394

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)
=(574.087 / 1164.419) / (585.501 / 1164.902)
=0.49302442 / 0.50261825
=0.9809

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 - (235.211 + 49.574) / 1270.976) / (1 - (351.457 + 58.186) / 1394.216)
=0.77593204 / 0.70618398
=1.0988

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
=1164.902 / 1164.419
=1.0004

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))
=(53.171 / (53.171 + 58.186)) / (52.633 / (52.633 + 49.574))
=0.47748233 / 0.51496473
=0.9272

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)
=(384.691 / 1164.902) / (406.029 / 1164.419)
=0.33023465 / 0.34869665
=0.9471

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)
=((1981.299 + 292.388) / 1270.976) / ((1996.296 + 503.127) / 1394.216)
=1.78892992 / 1.79270859
=0.9979

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
=(67.698 - -1.523 - 119.044) / 1270.976
=-0.0392

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.

Weight Watchers International Inc has a M-score of -2.69 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.

Weight Watchers International Inc Annual Data

Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14Dec15Dec16
DSRI 0.88320.85341.14931.06310.75110.89811.0351.02721.16440.9394
GMI 0.98821.02041.04470.95570.94260.97141.02411.07071.09990.9809
AQI 0.96470.97061.02651.01820.96840.98720.93610.94461.04781.0988
SGI 1.18961.04680.91091.0381.2621.00380.93730.85840.78681.0004
DEPI 0.91220.89870.90640.90111.12541.27250.95210.89320.83230.9272
SGAI 1.0741.03510.99451.03861.01391.1340.99431.0791.02540.9471
LVGI 1.76120.95460.91180.95810.81061.77440.85550.91791.01560.9979
TATA -0.1123-0.0351-0.0813-0.0792-0.0881-0.0623-0.0701-0.079-0.0224-0.0392
M-score -3.24-2.74-2.75-2.78-2.86-3.13-2.80-2.93-2.58-2.69

Weight Watchers International Inc Quarterly Data

Sep14Dec14Mar15Jun15Sep15Dec15Mar16Jun16Sep16Dec16
DSRI 1.09431.02720.91040.91871.0941.16441.07491.14910.96830.9394
GMI 1.0751.07071.08181.09431.09861.09991.07361.03941.00940.9809
AQI 0.92870.94461.02361.11361.0831.04781.08261.03321.08821.0988
SGI 0.85360.85840.84780.83150.81220.78680.82520.88070.93811.0004
DEPI 0.81440.89320.87960.8580.86230.83230.86040.89950.92810.9272
SGAI 1.0731.0791.03831.04421.03771.02541.03731.0171.01560.9471
LVGI 0.89190.91790.98511.03721.04461.01561.02091.00071.00010.9979
TATA -0.0701-0.079-0.0372-0.0419-0.0174-0.0224-0.0645-0.0339-0.0409-0.0392
M-score -2.84-2.93-2.84-2.84-2.59-2.58-2.83-2.59-2.73-2.69
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