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Weight Watchers International Inc (NYSE:WTW)
Beneish M-Score
-2.80 (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 -2.80 suggests that the company is not a manipulator.

WTW' s 10-Year Beneish M-Score Range
Min: -3.24   Max: -1.92
Current: -2.8

-3.24
-1.92

During the past 13 years, the highest Beneish M-Score of Weight Watchers International Inc was -1.92. The lowest was -3.24. And the median was -2.80.


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 * 1.0602+0.528 * 1.0401+0.404 * 0.953+0.892 * 0.9014+0.115 * 0.9057
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0273+4.679 * -0.0681-0.327 * 0.8766
=-2.80

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

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $40 Mil.
Revenue was 409.358 + 378.168 + 393.898 + 465.129 = $1,647 Mil.
Gross Profit was 222.9 + 212.759 + 229.959 + 278.244 = $944 Mil.
Total Current Assets was $368 Mil.
Total Assets was $1,483 Mil.
Property, Plant and Equipment(Net PPE) was $84 Mil.
Depreciation, Depletion and Amortization(DDA) was $46 Mil.
Selling, General & Admin. Expense(SGA) was $535 Mil.
Total Current Liabilities was $399 Mil.
Long-Term Debt was $2,352 Mil.
Net Income was 21.531 + 30.798 + 60.258 + 64.916 = $178 Mil.
Non Operating Income was 10.27 + 0.203 + 0.352 + -21.543 = $-11 Mil.
Cash Flow from Operations was 80.85 + 22.079 + 123.424 + 62.85 = $289 Mil.
Accounts Receivable was $42 Mil.
Revenue was 490.79 + 420.535 + 430.61 + 484.752 = $1,827 Mil.
Gross Profit was 283.637 + 256.096 + 255.833 + 293.524 = $1,089 Mil.
Total Current Assets was $274 Mil.
Total Assets was $1,315 Mil.
Property, Plant and Equipment(Net PPE) was $82 Mil.
Depreciation, Depletion and Amortization(DDA) was $38 Mil.
Selling, General & Admin. Expense(SGA) was $578 Mil.
Total Current Liabilities was $586 Mil.
Long-Term Debt was $2,196 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)
=(40.443 / 1646.553) / (42.318 / 1826.687)
=0.02456222 / 0.02316653
=1.0602

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)
=(212.759 / 1826.687) / (222.9 / 1646.553)
=0.59621052 / 0.57323512
=1.0401

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 - (368.024 + 84.176) / 1483.065) / (1 - (273.811 + 81.979) / 1314.72)
=0.69509091 / 0.72937964
=0.953

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
=1646.553 / 1826.687
=0.9014

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))
=(38.487 / (38.487 + 81.979)) / (45.872 / (45.872 + 84.176))
=0.31948434 / 0.3527313
=0.9057

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)
=(535.171 / 1646.553) / (577.94 / 1826.687)
=0.32502507 / 0.31638699
=1.0273

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)
=((2352 + 398.989) / 1483.065) / ((2195.824 + 586.296) / 1314.72)
=1.85493488 / 2.11613119
=0.8766

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
=(177.503 - -10.718 - 289.203) / 1483.065
=-0.0681

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 -2.80 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.

Weight Watchers International Inc Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 1.08151.14631.34240.88320.85341.14931.06310.75660.89161.035
GMI 1.01660.9580.99910.98821.02041.04470.95570.94590.9681.0241
AQI 0.99250.99740.99070.96470.97061.02651.01820.96840.98720.9369
SGI 1.08581.12331.07131.18961.04680.91091.0381.25281.01110.9373
DEPI 0.84580.92991.22590.91220.89870.90640.90111.12541.27250.9932
SGAI 1.13931.25940.84251.0741.03510.99451.03860.99861.15130.9888
LVGI 0.99251.43250.981.76120.95460.91180.95810.81061.77440.8536
TATA -0.0925-0.1439-0.0559-0.1123-0.0351-0.0813-0.0792-0.0861-0.0623-0.0685
M-score -2.79-3.13-2.31-3.24-2.74-2.75-2.78-2.85-3.13-2.79

Weight Watchers International Inc Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 0.75660.81040.87671.02910.89160.95820.89150.86181.03271.0602
GMI 0.94590.95080.96020.97440.9680.97020.980.9871.02281.0401
AQI 0.96840.98080.94170.95530.98720.96090.99220.94750.93690.953
SGI 1.25281.16061.08421.02571.01111.00410.9940.97260.93940.9014
DEPI 1.12541.14511.00891.71171.27251.35281.47481.10360.99320.9057
SGAI 0.99871.08651.09771.1231.15131.06791.03361.00170.9931.0273
LVGI 0.81061.66721.70341.73121.77440.85470.86740.8430.85360.8766
TATA -0.0861-0.0297-0.0376-0.0422-0.0623-0.0698-0.0568-0.0663-0.0685-0.0681
M-score -2.85-2.90-2.98-2.84-3.13-2.80-2.77-2.91-2.79-2.80
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