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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 -2.85 suggests that the company is not a manipulator.
During the past 13 years, the highest Beneish M-Score of Weight Watchers International Inc was -1.92. The lowest was -3.28. And the median was -2.84.
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 * 1.1251||+||0.528 * 1.0511||+||0.404 * 0.9253||+||0.892 * 0.8771||+||0.115 * 1.0858|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0695||+||4.679 * -0.088||-||0.327 * 0.8647|
|This Year (Jun14) TTM:||Last Year (Jun13) TTM:|
|Accounts Receivable was $37 Mil.|
Revenue was 397.547 + 409.358 + 378.168 + 393.898 = $1,579 Mil.
Gross Profit was 225.814 + 222.9 + 212.759 + 229.959 = $891 Mil.
Total Current Assets was $400 Mil.
Total Assets was $1,526 Mil.
Property, Plant and Equipment(Net PPE) was $81 Mil.
Depreciation, Depletion and Amortization(DDA) was $47 Mil.
Selling, General & Admin. Expense(SGA) was $522 Mil.
Total Current Liabilities was $386 Mil.
Long-Term Debt was $2,346 Mil.
Net Income was 54.002 + 21.531 + 30.798 + 60.258 = $167 Mil.
Non Operating Income was -0.889 + 10.27 + 0.203 + 0.352 = $10 Mil.
Cash Flow from Operations was 64.649 + 80.85 + 22.079 + 123.424 = $291 Mil.
|Accounts Receivable was $38 Mil.
Revenue was 470.888 + 490.79 + 407.915 + 430.61 = $1,800 Mil.
Gross Profit was 283.715 + 283.637 + 245.064 + 255.833 = $1,068 Mil.
Total Current Assets was $252 Mil.
Total Assets was $1,311 Mil.
Property, Plant and Equipment(Net PPE) was $88 Mil.
Depreciation, Depletion and Amortization(DDA) was $58 Mil.
Selling, General & Admin. Expense(SGA) was $557 Mil.
Total Current Liabilities was $337 Mil.
Long-Term Debt was $2,376 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(37.29 / 1578.971)||/||(37.787 / 1800.203)|
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.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(222.9 / 1800.203)||/||(225.814 / 1578.971)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (399.551 + 81.092) / 1526.364)||/||(1 - (252.412 + 87.868) / 1310.819)|
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.
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))|
|=||(58.167 / (58.167 + 87.868))||/||(46.982 / (46.982 + 81.092))|
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)|
|=||(522.153 / 1578.971)||/||(556.631 / 1800.203)|
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)|
|=||((2346 + 385.729) / 1526.364)||/||((2376 + 337.121) / 1310.819)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(166.589 - 9.936||-||291.002)||/||1526.364|
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 -2.85 suggests that the company will not be a manipulator.
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
Weight Watchers International Inc Annual Data
Weight Watchers International Inc Quarterly Data