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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.
During the past 13 years, the highest Beneish M-Score of The Western Union Co was 55.61. The lowest was -5.25. And the median was -2.60.
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 The Western Union Co 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 * 1.0174||+||0.528 * 1.0287||+||0.404 * 0.9921||+||0.892 * 0.9851||+||0.115 * 1.0056|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 0.9532||+||4.679 * -0.0278||-||0.327 * 0.9881|
|This Year (Sep16) TTM:||Last Year (Sep15) TTM:|
|Accounts Receivable was $1,117 Mil.|
Revenue was 1377.8 + 1375.7 + 1297.7 + 1380 = $5,431 Mil.
Gross Profit was 554.9 + 553.8 + 518.3 + 569 = $2,196 Mil.
Total Current Assets was $4,670 Mil.
Total Assets was $9,519 Mil.
Property, Plant and Equipment(Net PPE) was $224 Mil.
Depreciation, Depletion and Amortization(DDA) was $267 Mil.
Selling, General & Admin. Expense(SGA) was $1,117 Mil.
Total Current Liabilities was $4,455 Mil.
Long-Term Debt was $3,225 Mil.
Net Income was 216.9 + 205.6 + 185.7 + 212.3 = $821 Mil.
Non Operating Income was 2 + 2.5 + -1.5 + -6.6 = $-4 Mil.
Cash Flow from Operations was 336.3 + 272.9 + 212.7 + 266.9 = $1,089 Mil.
|Accounts Receivable was $1,115 Mil.
Revenue was 1399.2 + 1383.6 + 1320.9 + 1409.9 = $5,514 Mil.
Gross Profit was 582 + 584.2 + 549.1 + 578 = $2,293 Mil.
Total Current Assets was $4,784 Mil.
Total Assets was $9,816 Mil.
Property, Plant and Equipment(Net PPE) was $225 Mil.
Depreciation, Depletion and Amortization(DDA) was $271 Mil.
Selling, General & Admin. Expense(SGA) was $1,190 Mil.
Total Current Liabilities was $4,531 Mil.
Long-Term Debt was $3,484 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)|
|=||(1117.3 / 5431.2)||/||(1114.8 / 5513.6)|
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)|
|=||(2293.3 / 5513.6)||/||(2196 / 5431.2)|
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 - (4669.7 + 224.4) / 9518.7)||/||(1 - (4784.3 + 224.8) / 9815.9)|
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))|
|=||(270.7 / (270.7 + 224.8))||/||(266.9 / (266.9 + 224.4))|
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)|
|=||(1117 / 5431.2)||/||(1189.6 / 5513.6)|
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)|
|=||((3224.8 + 4455) / 9518.7)||/||((3483.8 + 4531.3) / 9815.9)|
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|
|=||(820.5 - -3.6||-||1088.8)||/||9518.7|
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.
The Western Union Co has a M-score of -2.58 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
The Western Union Co Annual Data
The Western Union Co Quarterly Data